Attorneys general in 20 states, most led by Democrats, had sued the administration. Similar suits have been filed over funding for other programs.

Attorneys general from several states filed the lawsuit in May, saying the new so-called “Duffy Directive” put them in an impossible position.

The ruling came in a lawsuit filed by a group of Democratic state attorneys general who argued the administration was seeking to unlawfully hold federal funds hostage to coerce them into adhering to the Republican president's hardline immigration agenda.