Lily Chiu is 25 and lives in a Chinese mainland town not far from Hong Kong. Her father is a truck-driver who obtained residency in Hong Kong when it was a British colony and when anyone who made it across the fence could stay.

Lily has always wanted to follow him to Hong Kong, where the standard of living is much higher than on the mainland, especially since she lost her job at a state-owned factory.

In January it seemed her dream would come true. That was when the bewigged judges of the Court of Final Appeal in Hong Kong made a ruling that granted residency to all children born on the mainland who have at least one parent living in Hong Kong.

But the court ruling panicked the Hong Kong government, which calculated it would open the doors to 1.67 million newly eligible immigrants. On Tuesday it asked China's parliament to effectively overrule the decision by reinterpreting the constitution, or Basic Law, which took effect after Britain returned the territory to China in 1997 and which gives right of abode to all children of Hong Kong residents.

It argued that otherwise the sudden immigrant influx would put a calamitous burden on the densely populated territory of 6.8 million people by swamping schools and hospitals, lowering living standards and forcing the government to spend the equivalent of £70 billion on new apartments and schools.

This decision has precipitated the biggest political crisis to date in post-handover Hong Kong, which was promised it could run its own affairs for half a century after its return to the motherland.

Pro-democracy politicians say it will sabotage the British legal system the territory inherited.

On Wednesday the 60-member Hong Kong legislature, which has a majority of hand-picked pro-Beijing members, endorsed the government's decision to refer the court ruling to the National People's Congress (NPC) in Beijing.

When the government refused an adjournment of a week to consider the implications, 19 members of the Democratic Party walked out wearing black suits and white carnations as a sign of mourning for lost judicial independence.

Yesterday dozens of their supporters in black headbands burned candles at a makeshift altar outside the legislature beneath signs saying "Death of Democracy" and similar sentiments.

Hong Kong's chief executive, Mr Tung Chee-hwa, said he had no choice but to ask Beijing to resolve the potential crisis by reinterpreting the Basic Law in such a way that it would reduce the number of potential immigrants to a more manageable 200,000, essentially by limiting the right of abode only to children born after the Hong Kong parent had obtained resident status.

"All of us would like happy family reunions, who wouldn't?" he told journalists. "But what we face is a problem of unplanned population growth which Hong Kong as a society will be unable to bear."

However, the court ruling in January had been seen as a litmus test of the "one country-two-systems" agreement under which Hong Kong reverted to Chinese rule. In his office in the legislative building yesterday, Mr Martin Lee, leader of the Democratic Party, said that he did not necessarily disagree with the government in "trying to draw a line and not to allow too many people to come to Hong Kong", but turning to Beijing to make legal interpretations would be "a dagger to the heart" of the independence of the Hong Kong judiciary.

THE proper way was to amend, not reinterpret, the Basic Law, he said, as happened in countries like Ireland when legal crises arose. In his view the whole thing was orchestrated by Beijing, because the communist government wanted to teach a lesson to a "rebellious" Court of Final Appeal, which is the guarantor of civil liberties in Hong Kong, where people enjoy rights unavailable on the mainland, such as free speech and peaceful protest (except in support of independence for Taiwan, Hong Kong or Tibet).

The Hong Kong media have not been convinced by Chief Secretary Anson Chan's insistence that the decision would not undermine the rule of law and that the administration will not "go running to the National People's Congress every time a court decision on the Basic Law goes against us."

The popular Apple Daily said it was a "wilful move to change the rules of the game." The South China Morning Post claimed the government exaggerated the numbers and "conducted a shabby and emotive `floodgates' campaign" to rally public support. But the Beijing-backed Mr Wen Wei Po argued that the move would boost investor confidence in the territory as the potential immigrant problem would be quickly resolved.

Hong Kong people themselves, many descended from Chinese refugees from communist rule, are deeply ambivalent about a sudden new influx of immigrants. Six out of 10 agree with the government. But 40 per cent believe that its decision is bad for Hong Kong. Many see it as another step in the erosion of the rule of law, already undermined by the government's recent failure to prosecute a newspaper tycoon who was not charged in a case where her executives were jailed for inflating circulation figures, partly because a guilty verdict on such a prominent person would have been bad for business.

Whatever happens, Lily Chiu now has a battle on her hands to get to Hong Kong. If, as expected, the National People's Congress strikes down the court ruling in coming weeks, Hong Kong will revert to a permit system under which the territory accepts only 150 Chinese immigrants a day, of whom 60 are the offspring of a Hong Kong parent.

But she will need a certificate of entitlement from Hong Kong verifying her relationship, and a permit issued by mainland authorities, at their discretion, to enter Hong Kong. "Discretion" often means handing out bribes amounting on average to the equivalent of £3,000 per immigrant, according to Mr Ho Hei-wah, director of the Society for Community Organisations.

The Court of Final Appeal essentially said in January it was wrong to give people like Lily Chiu a right and then prevent her from making use of that right by forcing her to wait in line. It might now be the year 2012 before her turn comes round.