The ruling marked the end of a long battle by the parents after the youngsters were collected by social workers -- some taken away screaming in dawn raids -- in the southern Scottish county of Ayrshire in 1990.
At least two of the children have no memory of their parents, according to a report to the court.
Lord Hope, Scotland's most senior judge, said new evidence had come to light showing the children, then aged between seven months and 11 years, should not have been taken from their homes in what he described as ``a tragedy of immense proportions.''
The so-called Satanic abuse cases sparked off a huge investigation and an enormous debate in the media. Social workers had said the children had described being abused, both sexually and psychologically, by covens of devil-worshippers who included their parents and community leaders.
But no one was ever charged after a major police probe and a Scottish court ruled that the social workers had been inadequately trained and had asked leading questions.
``More than 41/2 years have gone by since the children were removed from their families in circumstances which the additional evidence has now demonstrated did not justify their removal,'' Hope said. ``They must now be reunited with their families and we are anxious that this should be achieved without any further lapse of time than can be shown to be necessary.''
The eight children, from three related families, will be returned to their parents in stages.
``The last four or five years have been hell. I could not believe it can happen to anyone,'' one father told BBC radio.
``I handed my girl to these people for tests or whatever it was. They said I would get her back in two or three days -- and it was five years.''