The decision, confirmed by multiple MPs and officials, comes with parliament considering a new election law ahead of legislative polls due to be held in April, Iraq's first general election since 2010.
The federal supreme court ruled that because the law passed by MPs in January originated in parliament, it was unconstitutional, based on previous judicial rulings that have argued laws must be first proposed by Iraq's cabinet.
"This should have come from the cabinet or the presidency only, not from parliament," said Ali Shlah, an MP from Maliki's State of Law alliance.
MPs voted in January to adopt a measure to limit the president, premier and parliament speaker to two terms, but Maliki's supporters insisted at the time that the motion was not legally-binding and would be struck down in the courts.
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Iraq's constitution does not set term limits for those posts.
The Sunni-backed Iraqiya bloc, the main Kurdish alliance and the movement loyal to powerful Shiite cleric Moqtada al-Sadr -- all members of Maliki's national unity government who frequently criticise him in public -- were the measure's principal parliamentary backers.
The battle over term limits is the latest salvo in an ongoing political crisis that has meant no significant legislation has been passed since March 2010 elections.