The US Justice Department had asked the 5th US Circuit Court of Appeals to reverse a Texas judge who agreed to temporarily block the president's plan in February, after 26 states filed a lawsuit alleging Obama's action was unconstitutional. But on a two-one vote, a panel of the court denied the government's request.
It wasn't immediately clear if the government would appeal, either to the full appeals court in New Orleans or to the US Supreme Court.
US District Judge Andrew Hanen sided with the states and, from his court in Brownsville, Texas, issued a temporary injunction on Feb. 16 to block the plan from taking effect while the lawsuit works its way through the courts.
Justice Department lawyers sought a stay while they appealed the injunction. They argued that keeping the temporary hold interfered with the Homeland Security Department's ability to protect the US and secure the nation's borders. They also said immigration policy is a domain of the federal government, not the states.
Obama announced the executive action in November, saying lack of action by Congress forced him to make sweeping changes to immigration rules on his own. Republicans said Obama overstepped his presidential authority.
The first of Obama's orders to expand a program that protects young immigrants from deportation if they were brought to the US illegally as children was set to take effect Feb. 18. The other major part, extending deportation protections to parents of US citizens and permanent residents who have been in the country for some years, had been scheduled to begin May 19.