Palestine Action (PA) can still challenge the decision to ban the group under anti-terror laws after the government lost an appeal.
The group was "proscribed" in July, making it illegal to show any support or affiliation for them, after incidents that included breaking in to a RAF base.
The Home Office appealed after a court granted PA' s co-founder a judicial review and said the ban disproportionately interfered with the freedom of speech and assembly.
It said the government should also have consulted the group first.
Despite the ban, nearly 900 PA supporters were arrested at a single protest in London last month.
The judicial review of the ban was scheduled to begin on 25 November and today's Court of Appeal decision means it can still go ahead.
PA called it a "landmark victory" and said co-founder Huda Ammori had also been granted permission to appeal on two further grounds.
Reacting after the court's decision, Ms Ammori called the ban "absurdly authoritarian" and "one of the most extreme attacks on civil liberties in recent British history".
She said 2000 people had been arrested since PA was outlawed and that arresting "peaceful protesters" under the Terrorism Act was a misuse of resources.
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