A US federal judge has ruled that the city of Detroit can use bankruptcy proceedings to slash its ex-employees' existing pensions and relieve itself of other debts.

Judge Steven Rhodes handed a crushing defeat to the trade unions representing city employees and its 23,00 pensioners and pension funds on Tuesday that could lose massively under any plan to reduce $18 billion (£11bn) in debts.

The court declared that pensions could be cut and a provision in Michigan's Constitution that previously protected public pensions couldn't be considered as a shield during bankruptcy.

The city has pension liabilities of $3.5bn (£2.1bn) and unfunded health care liabilities of $5.7bn (£3.5bn).

A stream of anxious retirees drawing pensions of less than $20,000 (£12,250) a year appeared in court and put a human face on the complex case.

The destruction of Detroit's manufacturing base has led to more than a million residents fleeing the city since a population peak of 1.8 million in 1950.

Bankruptcy expert Kevyn Orr was appointed as city manager in March with extraordinary powers to reshape local finances without interference from elected officials.

He decided that tax revenue can't now cover pensions, retirees' health insurance and the buckets of debt that had been sold to keep the budget afloat.

The city has argued that it needed bankruptcy protection for the sake of beleaguered residents suffering from poor services such as near non-existent police response, darkened street lights and erratic rubbish collection.

Much of the trial focused on whether Mr Orr's team had negotiated "in good faith' with creditors before filing for bankruptcy.

Unions and pension funds insisted there had never been serious across-the-table talks.

And the judge accepted that Mr Orr hadn't negotiated in good faith, but he claimed the number of creditors - more than 100,000 - probably made that "impossible."

Detroit "could and should have filed for bankruptcy long before it did. Perhaps years," he said.

Before the July filing, nearly 40 cents of every tax dollar collected by Detroit was used to pay debt and the city claimed that figure could rise to 65 cents.

Trade union lawyer Sharon Levine said that she would pursue an appeal.