In February, Apple pulled ADP from the UK and in March it launched legal proceedings against the government, in a case which is being heard by the Investigatory Powers Tribunal.
The government argued it would damage national security if the nature of the legal action and the parties to it were made public - what are known as the "bare details of the case".
In a ruling published on Monday morning, the tribunal rejected that request - pointing to the extensive media reporting of the row and highlighting the legal principle of open justice.
"It would have been a truly extraordinary step to conduct a hearing entirely in secret without any public revelation of the fact that a hearing was taking place," it states.
"For the reasons that are set out in our private judgement, we do not accept that the revelation of the bare details of the case would be damaging to the public interest or prejudicial to national security," it later adds.
In a statement the Home Office said it would not comment on legal proceedings or individual notices but said its "first priority is to keep people safe."
"There are longstanding and targeted investigatory powers that allow the authorities to investigate terrorists, paedophiles and the most serious criminals and they are subject to robust safeguards including judicial authorisations and oversight to protect people's privacy," it added.
It stressed it was not seeking blanket data access - and any requests to view individual accounts protected by ADP would need a court approved warrant.
Civil and digital rights organisations in the UK, which criticised the Home Office request, have welcomed Monday's ruling.
They, along with news organisations - including the BBC - made legal representations for the case to be heard in public.
"This is bigger than the UK and Apple," said Jim Killock, executive director of Open Rights Group.
"The Court's judgment will have implications for the privacy and security of millions of people around the world."
The Open Rights Group campaigned alongside Big Brother Watch and Index on Censorship against the proposal to hold the hearing in secret.
Big Brother Watch interim director Rebecca Vincent says the judgement is "effectively chipping away at the pervasive climate of secrecy surrounding the Investigatory Powers Tribunal's consideration of the Apple case".
"The Home Office's order to break encryption represents a massive attack on the privacy rights of millions of British Apple users, which is a matter of significant public interest and must not be considered behind closed doors," she adds.
Apple declined to comment.
In a previous statement it told the BBC: "Apple remains committed to offering our users the highest level of security for their personal data and are hopeful that we will be able to do so in the future in the United Kingdom.
"As we have said many times before we have never built a backdoor or master key to any of our products or services and we never will."