A conviction for the murder of a cinema manager, that sent a young Liverpool labourer to the gallows 53 years ago, was yesterday overturned by the court of appeal.

George Kelly was executed at Walton jail on Merseyside in March 1950, following what was then the longest criminal trial in English legal history. His plea for clemency had been rejected by the home secretary of the day, James Chuter Ede.

Announcing their decision yesterday, three appeal judges, Lord Justice Rix, Mr Justice Douglas Brown and Mr Justice Davis, concluded the original verdict was "unsafe". The case was the oldest referred to the criminal cases review commission, the statutory body that investigates alleged miscarriages of justice. The crown did not attempt to uphold the conviction.

During the appeal, the judges heard that a statement given by a prosecution witness, claiming a man called Donald Johnson had confessed to committing the crime, had not been disclosed at the original trial.

The crime for which Kelly was hanged shocked postwar Britain. Leonard Thomas, 44, manager of the Cameo Cinema in Wavertree, Liverpool, and his assistant, John Catterall, 30, were killed during a bungled burglary in March 1949.

While the audience watched a thriller, a man in a brown coat, trilby hat and mask burst into the manager's first-floor office as the night's takings were being counted. Thomas was shot in the chest; Catterall, who arrived moments later, was hit in the hand, chest and back. The gunman panicked and fled, leaving the cash untouched.

Pressure on the police for arrests mounted and as many as 65,000 people were questioned. An anonymous letter eventually led detectives to Kelly, a petty criminal nicknamed the "little Caesar of Lime Street", and Charles Connolly, then 26, who allegedly acted as lookout.

In the first trial, which lasted 13 days, the jury failed to reach a verdict. The two men were then tried separately. Connolly pleaded guilty in February 1950 to robbery and conspiracy and was sentenced to 10 years in prison. He died in 1997, protesting his innocence.

The court of appeal overturned both convictions, even though the crown opposed the application on behalf of Connolly.

"However much the Cameo murders remain a mystery, we regard the circumstances of Kelly and Connolly's trials as a miscarriage of justice which must be deeply regretted," Lord Justice Rix said yesterday.

During the hearing Orlando Pownall QC, for the crown, said Donald Johnson had told a man called Robert Graham, a serving prisoner, that he had been responsible for the shootings. Graham made a second statement to police several months later incriminating Kelly and Connolly and was later granted immediate release.

But Graham's September 1949 statement implicating Johnson was not discovered until 1991 when a member of the public with an interest in the case was given access to Merseyside police files.

The prosecution accepted that the document was genuine and in the absence of evidence to the contrary conceded that Graham must have spoken to Chief Inspector Herbert Balmer, one of the officers involved in the inquiry.

Mr Pownall told the judges: "It is not proposed by the crown to dwell on any conspiracy theories... If there had been a conspiracy it seems unlikely anyone involved would have left that original document in a box to be found years later." Ch Insp Balmer, he said, like most of those involved in the case, had long since died.

Kelly's daughter, Kathleen Hughes, left the courtroom in tears, refusing to comment. She had previously stated: "I have waited a long, long time for this day. I hope now I can give him a decent Christian burial, which I have previously been thwarted from doing."

Robin Makin, the Kelly family's lawyer, said it was a "deplorable" situation. "George Kelly's brothers made efforts on his behalf from the time of the conviction in 1950 and there was nothing that could be done. There is tremendous concern about the way in which matters were handled at that time."

Connolly's brother, Eddie, said afterwards: "A lot of doubters at the time will have been proven wrong today. We've known all along that they were innocent."

The court of appeal is to consider the case of a Liverpool man hanged for a double murder more than 50 years ago.

The decision was announced yesterday - the 51st anniversary of the conviction at Liverpool assizes of George Kelly. His case was the oldest referred by the criminal cases review commission since it began work four years ago, said a commission spokesman.

Kelly's daughter, Catherine, is represented by a veteran Liverpool solicitor, Rex Makin, peripherally involved in the case when it came to court. "We cannot bring the man back, and money cannot compensate,'' said Mr Makin. "But we want justice. There was so much police malpractice then that it needs to be exposed so it can never happen again.''

On March 19, 1949, Kelly, 28, and Charles Connolly, 26, set out to rob the Cameo cinema in Wavertree. They were alleged to have shot dead the manager, Leonard Thomas, and his assistant, John Catterall, in an office.

Police investigations were stalled until detectives received an anonymous letter offering information in return for protection. Officers accepted the deal in an advert in the Liverpool Echo, and eventually met James "Stutty" Northam, who had been involved in planning the raid. He said Kelly had planned to carry out the robbery while Connolly kept watch.

Kelly and Connolly were tried but the jury failed to agree at the end of a 13-day hearing. The two were then tried separately. Kelly was convicted on February 8, 1950, and sentenced to be hanged. His appeal was turned down, and he was executed on March 28 at Walton jail, where he was buried.

The prosecution offered no evidence on the murder charge against Connolly, who was jailed after admitting robbery and conspiracy charges. "Members of Mr Kelly's family have always nursed a sense of injustice, and applied to the commission,'' said Mr Makin yesterday.

"The whole case was a farce and it could never happen today. It was a fit-up and was based on little or no evidence. What there was was verbal evidence from prostitutes and informers and prison yard conversations. The solicitor involved was alleged by Kelly's brothers, Frank and Joe, to have acted improperly.

"I was then a very young solicitor, making a living by the sweat of my tongue. Frank and Joe came to see me not long before Kelly was to be hanged to complain about how George had been represented and about the injustice being done to their brother.

"I could do nothing about it, and their faces haunt me to this day.''

The case of a man hanged for the murder of a cinema manager half a century ago was referred to the Court of Appeal by the Criminal Cases Review Commission yesterday.

George Kelly, a 27-year-old labourer, was sentenced to death at Liverpool Assizes in February 1950 for shooting dead Leonard Thomas during a robbery at the Cameo Cinema, in Wavertree, Liverpool. Relatives have always claimed he was innocent and the family's solicitor, Robin Makin, believes Kelly's name will now be cleared.

He said: "The family have been trying to reverse this injustice for 51 years. This development is a major triumph. An innocent man went to the gallows and now is the time to prove, using detailed documentation, that there was insufficient evidence for a conviction." A first appeal by Kelly in 1950 alleged that he had been the victim of a mistrial because a member of the jury was a convicted felon.

The argument was dismissed by the Court of Appeal, and the then Attorney General, Sir Hartley Shawcross, refused to refer the case to the Lords. Kelly was executed at Walton jail in Liverpool on March 28, 1950, after the Home Secretary, James Chuter Ede, refused to grant a reprieve. The labourer had originally been tried with Charles Connolly for the murders of Mr Thomas, 44, and John Catterall, 30, a cashier.

After a 13-day hearing, the jury was undecided and the defendants were retried individually. This time, Connolly was charged with robbery and conspiracy. He pleaded guilty and was jailed for 10 years. He has since died, said Mr Makin. Kelly was tried for the murder of Mr Thomas only.

A memorandum submitted by the Muir Society, a group of Scottish lawyers, to the Royal Commission on Capital Punishment later criticised the handling of the case. Mr Makin said that his father, Rex, first took on the case at the time of the hanging when he was consulted by Kelly's brothers.

He added: "They wanted to ask my father if there was anything that could be done, because they were clearly very unhappy." He said that when the case of Kelly returned to the Appeal Court, it was not the intention to implicate Connolly. However, he suggested that an unfair deal had been struck which proved fatal for Kelly.

He said: "In those days somebody had to pay for a crime. Now justice must be done. This is very similar to the Bentley case where the facts were distorted." Derek Bentley, a backward epileptic, was hanged in the Fifties for a shooting committed by Christopher Craig, who was too young to face the death penalty.

Bentley's conviction was finally quashed by the Court of Appeal in July 1998. A spokesman for the Criminal Cases Review Commission said an application for a review of the Kelly case was made in March 1998.