The U.S. government said it was resuming work on controversial human embryonic stem cell research on Friday after an appeals court ruled in its favor.

In the latest legal back-and-forth on the issue, a U.S. appeals court on Thursday granted an Obama administration request to temporarily lift a judge's ban on federal funding of research involving human embryonic stem cells.

More legal action is pending but the National Institutes of Health said it would resume work that had been suspended.

We are pleased with the court's interim ruling, which will allow promising stem cell research to continue while we present further arguments to the court in the weeks to come, the NIH said in a statement.

With the temporary stay in place, NIH has resumed intramural research and will continue its consideration of grants that were frozen by the preliminary injunction on August 23. The suspension of all grants, contracts, and applications that involve the use of human embryonic stem cells has been temporarily lifted, it added.

The three-judge panel of the appeals court said in its brief order on Thursday that it put on hold the judge's ban while it considers the merits of the administration's emergency request for a stay of his injunction.

U.S. District Judge Royce Lamberth ruled last month that the research violated U.S. law because it involved destroying human embryos. The ruling was a setback for President Barack Obama, who had tried to expand the research.

The appeals court ordered that briefs be filed by September 20. It then will have to decide whether its temporary administrative stay should be extended or ended.

Federal funding for human embryonic stem cell research had been challenged by Dr. James Sherley, a biological engineer at Boston Biomedical Research Institute, and Theresa Deisher, of Washington-based AVM Biotechnology.

They argued it violated U.S. law because human embryos were destroyed and it created unfair competition for limited money for their own work on adult stem cells.

Their attorneys have until September 14 to file a brief with the appeals court, and then the administration has until September 20 to file a reply.

Last month, NIH Director Dr. Francis Collins said 50 applications for human embryonic stem cell research being considered for federal funding were being pulled out of the stack because of Lamberth's injunction. He said the NIH would have to freeze $54 million worth of grants up for review this month.

Any direct work using human embryonic stem cells done at NIH would also be stopped, he said. About $130 million worth of ongoing research would not be affected, he said.

Human embryonic stem cell research holds the potential for generating profound new insights into disease, cell-based therapeutics, and novel methods of screening for new drugs, the NIH said in its statement on Friday.