The gambling regulator has accidentally handed over more than 4,000 sensitive documents to lawyers acting for the media tycoon Richard Desmond, in an “unprecedented” blunder during its legal battle over the £6.4bn national lottery contract, the Guardian understands.

Northern & Shell (N&S), the investment group owned by Desmond, is suing the Gambling Commission for £200m in damages over its handling of the lottery licence award process.

The regulator awarded the 10-year lottery licence to the Czech-owned operator Allwyn in 2022, rejecting a bid from the incumbent, Camelot, and a third proposal from Desmond, who is the former owner of the Daily Express and a range of pornographic publications.

A trial is due to go ahead in October at the high court, despite warnings from the commission that any resulting payout to N&S may have to be funded from lottery money allocated to good causes.

N&S rejected a settlement with the commission worth up to £10m in December last year, the Guardian has previously revealed.

On Wednesday, during a procedural hearing, it emerged that the commission had made what one insider described as a “huge” error during pre-trial disclosure, the process during which the two factions hand over relevant information to one another.

The commission, which is represented by the London law firm Hogan Lovells, is understood to have accidentally handed over more than 4,000 sensitive documents about the lottery award process to lawyers for N&S.

The regulator wants the court to order the return of some of the documents but is understood to be unsure exactly which files were handed over in error and has been trying to figure this out since before Christmas.

The commission asked for a six-week extension to go through this process but Mrs Justice Jefford granted them until next week.

She described the error as “extraordinary” and “unprecedented” and ruled that the regulator must pay N&S’s costs incurred as a result of the hearing.

There is no guarantee the judge will rule that the documents should be handed back or redacted. A new hearing on the matter is scheduled for early March.

The Gambling Commission and Hogan Lovells said they could not comment on an open case. N&S declined to comment.

The award of the fourth national lottery licence wrested control from Camelot for the first time since the inception of the weekly draw in 1994.