The court said the Legislature will determine whether such benefits will come through formal marriage or a system of domestic partnerships.
"We hold that the state is constitutionally required to extend to same-sex couples the common benefits and protections that flow from marriage under Vermont law," the justices said.
"Whether this ultimately takes the form of inclusion within the marriage laws themselves or a parallel `domestic partnership' system or some equivalent statutory alternative, rests with the Legislature.
"Whatever system is chosen, however, must conform with the constitutional imperative to afford all Vermonters the common benefit, protection, and security of the law," the court said.
Advocates of same sex marriage had high hopes for the Vermont case because the state is considered a leader in laws protecting the rights of gays and lesbians. Vermont has passed laws prohibiting discrimination against gays and lesbians in employment, housing, and public accomodations and has enacted a law that punishes hate crimes against gays and lesbians.
Monday's ruling stems from a suit filed in July 1997 by three couples - two lesbian and one gay - after they were denied marriage licenses by their local town clerks. The clerks acted on the advice of the state attorney general, who relied on a 1975 opinion by a predecessor calling same sex marriages unconstitutional.
The three couples first filed suit in Chittenden County Superior Court but a judge rejected their claims. The couples then appealed to the Supreme Court, which heard arguments in the case 13 months ago.
The couples argued that their inability to get married denied them more than 300 benefits at the state level and more than 1,000 at the federal level. The Supreme Court acknowledged that, saying the benefits included "access to a spouse's medical, life, and disability insurance, hospital visitation and other medical decisionmaking privileges, spousal support, intestate succession, homestead protections, and many other statutory protections."
Monday's decision, written by Chief Justice Jeffrey Amestoy, acknowledges the controversy swirling around the issue of same-sex marriages. It is "a question that the court well knows arouses deeply felt religious, moral, and political beliefs," the justices said in their decision.
The issue divided the court. While all five justices agreed that gay and lesbian couples should receive the same benefits as granted couples of the opposite sex, three of the justices joined a concurring opinion written by Justice John Dooley that challenged the reasoning behind Amestoy's decision.
And Justice Denise Johnson wrote a separate opinion saying the court had not gone far enough. She said the court recognizes that gays and lesbians are entitled to cetain rights and "yet declines to give them any relief other than an exhortation to the Legislature to deal with the problem." Johnson said she would require town clerks to issue marriage licenses to same sex couples.
The Vermont ruling had been anxiously awaited by both sides in the highly charged debate over same sex marriages. It comes on the heels of a ruling earlier this month by the Hawaii Supreme Court upholding a 1998 amendment to the Hawaii Constitution outlawing same-sex marriages.
Monday's ruling cannot be appealed to the U.S. Supreme Court since the Vermont court based its decision on the state Constitution. The Vermont Supreme Court is the state's only appeals court.
The decision places the issue before the Legislature, which will convene next month for its 2000 session.
Gov. Howard Dean has declined to state a position on same sex marriages, saying that he was awaiting the decision of the court. But the lieutenant governor, Douglas Racine, and the speaker of the Vermont House, Michael Obuchowski, have said they favor same sex marriages.