A mum caring for her disabled adult son has lost her court case against the Government, and will not be paid for all her work.

Diane Moody, who cares full time for her son Shane Chamberlain, 50, took the Ministry of Health to court after they decided she could only receive payment up to 21 hours a week, on minimum wage.

Shane is profoundly intellectually disabled and also has Williams syndrome. Moody is 75 years old and has always cared for Shane at home.

While Moody argued her work takes up 168 hours a week, officials said their Funded Family Care policy only paid for "personal care" and "household management", not supervision.

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Moody argued in the High Court at Auckland the policy was unreasonable. She also said measuring Shane's needs in terms of time was "inconsistent with his dignity".

However, the court ruled this week the Ministry was acting within the law.

"Although I can understand why Mrs Moody was surprised, I conclude the Ministry's decisions are, legally, within the terms of the Funded Family Care Policy," Justice Palmer said.

"The funding decisions are not unreasonable. No enforceable substantive legitimate expectation was breached. I do not consider the policy is unlawful because it uses time to measure needs."

The challenge by Moody was the latest in a long list of court action between families and the Government over disability rights.

The Government has strongly argued against paying family carers, previously saying looking after the disabled was a "social contract". It did however, pay for someone else to come and do the job.

In 2010, some families decided to challenge the police at the Human Rights Tribunal, arguing discrimination. While they won that case, it was twice appealed - and twice lost.

In response, the Government passed the Health and Disability Amendment Bill under urgency in 2013. It allowed for some family members to be paid, but also sought to stop any further legal challenges to the policy - which at least one lawyer argued was a breach of constitutional law.

Under the policy, family carers - but not spouses - would be paid minimum wage for up to 40 hours a week.

In court, the Government had argued this might cost up to $593 million a year. However as of 2014, of the 9400 family carers in New Zealand, fewer than 100 were receiving payment for their work.

At least two individuals have mounted challenges to the carer policy - Margaret Spencer, who eventually won $200,000 compensation, and Diane Moody, whose case is the subject of the current decision.

Moody's lawyers indicated they would appeal.