The unanimous judgement by the London Central Employment Tribunal found Downs was unfairly dismissed and awarded her one month's pay plus a "modest" compensatory award.
Downs told HW that she felt "vindicated" by the decision, which followed a two-day hearing in November last year. "I feel really positive," she explained. "I think it is very fair on me and on the institute because the award is not punitive."
Now chair of the Society of Garden Designers, Downs was made redundant as part of cost-cutting measures at the institute after revelations of financial woes surfaced in autumn 2008. A total of 11 staff out of 26 lost their jobs - saving the institute £300,000 a year.
During the employment tribunal hearing, Landscape Institute chief executive Alastair McCapra explained that it became clear in September 2008 the organisation was "rapidly heading for bankruptcy unless immediate and drastic measures were taken".
Downs argued the option of alternative employment as the institute's head of library and information services should have been offered to her.
She claimed the appeals process was not impartial because the panel was made up of Landscape Institute president Neil Williamson, along with another trustee.
McCapra told HW: "I am glad the matter has been resolved after such a long time." Although the archive is currently mothballed, a plan is underway for a "major fund-raising campaign" to provide for its future, he added.
The plan has been formulated by an external library group that last year formally proposed the idea of forming an independent trust for the collection.
Downs added: "If I hadn't really seriously challenged what was being proposed we could well have lost the library and archive."
The institute has now struck a deal over rent at its central London headquarters and will pay £105,000 a year. However, it is looking at offices in Bloomsbury for half that sum, McCapra revealed.