"The children who were minor in 1971 or born after the independence of Bangladesh are citizens of Bangladesh," the High Court said in a ruling, over a petition by a group of Bihari Muslims pleading for Bangladeshi citizenship.
"They are also eligible to be enrolled as voters in Bangladesh," said the ruling read out to Reuters by lawyer Hafizur Rahman Khan.
With the ruling nearly half of about 300,000 Biharis waiting for Pakistan to accept them may become lawful citizens of Bangladesh," Khan said.
"They may also vote in the parliamentary election due in next December, he added.
The Urdu-speaking Muslims, who migrated to former East Pakistan (now Bangladesh) from India following the partition of the subcontinent in 1947, sided with the Pakistan army during Bangladesh's 1971 war of independence.
Home ministry officials said about 140,000 Biharis who were either born in Bangladesh or have expressed loyalty to the country would be granted citizenship.
The rest would continue to languish in Bangladesh refugee camps waiting for an agreement with Islamabad to take the Biharis to Pakistan.
Pakistan has avoided the issue over decades despite repeated requests by Bangladesh, leaving the Biharis in crammed, squalid camps in Dhaka and other towns, run by the U.N. High Commissioner for Refugees and the Bangladeshi government.
But the new generation Biharis, who say they do not belong to Pakistan nor want to go there, have for years urged the Dhaka government to accept them as Bangladeshis -- despite objections from their parents and grandparents.