The federal government can continue to fund embryonic stem cell research, a U.S. district judge ruled Wednesday.

U.S. District Chief Judge Royce Lamberth tossed out a 2009 lawsuit against an Obama administration policy that expanded funding for the research. The plaintiffs -- scientists Theresa Deisher of AVM Biotechnology and Dr. James Sherley of Boston Biomedical Research Institute - wanted to halt federal tax dollars from being used for research on embryonic stem cells.

The plaintiffs argued that the Obama administration policy to increase stem cell research funding was a direct violation of a previously law, the Dickey-Wicker Amendment, which prohibits "research in which a human embryo or embryos are destroyed, discarded or knowingly subjected to risk or injury or death greater than that allowed for research on fetuses in utero."

Initially, Lamberth agreed with Deisher and Sherley, issuing an injunction halting the federal funding on embryonic stem cell research in August 2010. A month later, an appeals court panel issued an administrative stay, temporarily overturning Lamberth's injunction. In April 2011, the appeals court made the reversal permanent, the Los Angeles Times reported.

On Wednesday, Lamberth reversed his earlier decision, deferring to the appeals court's interpretation of the law, which said that federal funding for stem cell research does not violate the Dickey-Wicker Amendment as Congress never said the restrictions extended to research involving embryonic stem cells created with private funds.

"We clearly think it's the right decision. It will now lift the cloud that's been hanging over researchers around the country," said Dr. Jonathan Thomas, chairman of the California Institute for Regenerative Medicine.

Sherley, an adult stem cell researcher, plans to file an appeal with support from the Alliance Defense Fund, an organization that advocates religious freedom.

"American should not be forced to pay for experiments that destroy human life, have produced no real-world treatments, and would violate federal law," said ADF senior counsel Steven Aden. "The law is clear, and we intend to review all our options for appeal of this decision.

"In these tough economic times, it makes no sense for the federal government to use taxpayer money for this illegal and unethical purpose."