Their four-bedroom house and 30-acre farm is estimated to be worth £875,000 and with Inheritance Tax at 40 per cent the remaining sister faced an estimated bill of £225,000.

The siblings had written to the Chancellor before every Budget since 1976 asking for family members to be exempted from Inheritance Tax, but to no avail.

The sisters were then encouraged to take the fight to the European Court of Human Rights by the introduction of the Civil Partnership Act 2004, which grants the same rights to gay and lesbian couples who register as civil partners as to married couples.

Under inheritance law, married couples, or those living in a civil partnership, can leave their share of their property to each other in their Wills tax-free.

But when either Joyce or Sybil dies, even though they had lived together for many years, the surviving sister would have had to sell her home in order to pay the tax on her late sister's estate, all because of the way the Inheritance Tax law works and the penal rates of tax payable.

The Burden sisters didn't understand why the rights of married and gay couples couldn't also be applied to family members who live together and felt that this amounted to discrimination under the terms of the European Convention of Human Rights.

But last month, judges in Strasbourg voted 12-5 that the sisters were not victims of discrimination. They stated that: "The absence of such a legally-binding agreement between the applicants (the Burdens) rendered their relationship of co-habitation, despite its long duration, fundamentally different to that of a married or civil partnership couple."

The sisters still continued their fight by lobbying through politicians. After the ruling, they said: "We are struggling to understand why two single sisters in their old age, whose only crime was to choose to stay single and look after their parents and aunts, should find themselves in such a position in the UK in the 21st century.

"Having always paid our taxes and cared for our relatives and each other when necessary without any help from the state, we are now in the worrying and unsettling position of being unable to secure each other in our last few years."

But now, the government minister, Lord Davies of Oldham, has told the House of Lords that the Inland Revenue (HMRC) will now make an exception for the two sisters.

He said: "The Inland Revenue is not in the business of dispossessing people of their homes.

"That has not yet happened because the two sisters are, happily, alive and well.

"When such a case occurs, the Inland Revenue takes due care to ensure that the payments are staggered over a period of time in order that someone should not be dispossessed of the home they may have lived in for a long time."

When asked by the House of Lords if the government's attitude was "extremely mean-spirited", Lord Davies answered: "I wanted to indicate that HMRC works sympathetically in cases such as the one that has been identified by the two sisters.

"No one is contemplating one of them losing her place in the home if the other dies. That will not happen."

At present Inheritance Tax affects estates which are valued at more than £312,000 - but the government intends to further increase the threshold to £350,000 in 2010. However, many tax experts think that this isn't good enough.

The government believes that Inheritance Tax affects only the very wealthy, but with the rapid increase of house prices over the past decade, the number of homes valued above the Inheritance Tax threshold has nearly doubled in five years and revenues are up by more than 50 per cent in the same period.

Hugh Williams, award-winning accountant and author of 101 Ways to Pay Less Tax and Tax Answers at a Glance, believes that the law is iniquitous. He says, "More and more ordinary families are falling into the Inheritance Tax bracket and are fearful of losing their hard-earned money to the taxman. For many families, the impact of being caught by this 40 per cent tax can be devastating.

"If you're worried about Inheritance Tax, the most important thing you can do is make a Will. If you don't, the state decides who will receive your money and assets after your death. By making a Will, you can use it to transfer some of your assets to your loved ones after your death within the Inheritance Tax threshold, which would mean that these gifts are tax free.

"Also remember to keep your Will up to date at all times and revise it whenever your circumstances change; for example, when there is a marriage, divorce or death in the family."

Further information
Six steps to protecting yourself from Inheritance Tax
Why should I make a Will?
Are you living unmarried with your partner? Why you should make a Will
Make a Will now and save solicitors' fees by using Lawpack's DIY Will Kit
Find out ways to cut yor tax bills with Hugh's book, 101 Ways to Pay Less Tax
Get all your tax questions answered with Hugh's book, Tax Answers at a Glance