TORONTO, Jan 6 (Reuters) - An Ontario judge has ruled that a C$50 billion ($48.82 billion) lawsuit against a group of 14 tobacco companies can proceed, after rejecting an application to dismiss the lawsuit by a group of seven companies.

Canada's most populous province launched the lawsuit in 2009, seeking past and ongoing healthcare costs borne by taxpayers due to tobacco-related illness since 1955.

The decision was announced by the Ontario attorney general on Friday. The companies named include Rothmans Benson & Hedges, which is partly owned by Philip Morris, Imperial Tobacco Canada ltd, a unit of British American Tobacco, and Japan Tobacco.

The lawsuit alleges the companies knew about the addictiveness of cigarettes and the health risks they posed and they deceived the public by misrepresenting those risks. The companies have denied the claims.

The application from seven companies sought a dismissal on the basis that the court had no jurisdiction over them.

The tobacco industry is facing suits from several provinces seeking to recoup healthcare costs. In Canada, the public healthcare system is administered by each of the 10 provinces.

"We are pleased with the court's decision which paves the way for Ontario's lawsuit to continue," the attorney general said in the statement.

Ontario is struggling to rein in its C$16 billion deficit, the deepest budget gap of any Canadian province, and healthcare is by far its biggest expense.

The government said smoking is the leading cause of premature death and illness in Ontario and costs the healthcare system C$1.6 billion annually.

The decision follows a Supreme Court of Canada decision in July that ruled the federal government is not liable for damages from health-related lawsuits.

($1=$1.02 Canadian)

(Reporting by Cameron French)

Follow us on Twitter: @ReutersLegal