9 of its 11 justices rejected an interpretation which restricted Indigenous land rights to areas that were physically occupied by native communities since 1988, when Brazil passed its Constitution.

The Supreme Court ruling was vital to resolve some 300 pending land recognition claims, according to Indigenous leaders, who said communities would now be protected from land-grabbers and invasion by illegal loggers and gold miners.

Activists say it's also a victory for global efforts against climate change, as it would prevent deforestation on Indigenous land.

"We're emotional, we're happy, and we cry because we know that it's only with demarcated territory, with protected indigenous territory, that we'll be able to stop climate change from happening and preserve our biome. We're responsible for it."

Brazil's Amazon region and some farm states are home to 1.6 million Indigenous people.

The case before the Supreme Court stems from a land claim by the Xokleng people, in Santa Catarina state.

The state government rejected their land claims, arguing the native community was not living on the disputed area in 1988.

But the Xokleng were evicted in the 1950s by tobacco farmers.

And in rejecting the state government's cut-off date, the justices said Indigenous communities not living on their lands in 1988 most likely had been expelled.

With this ruling, President Luiz Ignacio Lula da Silva has grounds to veto a bill farm interests are rushing through Congress - that would invalidate Indigenous land claims also using same the 1988 cut-off date.

There were fierce clashes in May between Indigenous protesters and police over the legislation.

The legislation is currently in the Senate where it will be voted on next week.

Brazil's agricultural caucus in Congress deplored Thursday's Supreme Court ruling... and said they will push to get the Senate to approve the bill limiting indigenous land rights.

Indigenous leaders, meanwhile, hope President Lula, who created the ministry of Indigenous peoples when he took office in January, won't sign the bill into law.