Palestine Action 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 it, following incidents that included breaking in to an RAF base.
The Home Office appealed after a court granted the group's co-founder a judicial review and said the ban disproportionately interfered with freedom of speech and assembly.
It said the government should also have consulted the group first.
Despite the ban, nearly 900 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 Friday's Court of Appeal decision means it can still go ahead.
Palestine Action 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 2,000 people had been arrested since it was outlawed and arresting "peaceful protesters" under the Terrorism Act was a misuse of resources.
The group's vandalising of aircraft at Brize Norton in June - with two activists reportedly entering on electric scooters - prompted a security review of UK defence sites.
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Its supporters have carried out numerous protests in the UK, with many involving vandalism and violence.
Last year, it smashed windows and sprayed red paint on Barclays branches and this summer vandalised a Bristol defence technology firm, allegedly assaulting staff and police.
Multiple rallies for the group have taken place in London since July's ban, with hundreds detained for showing support.
A protest at the start of this month saw another 492 people arrested despite calls for the event to be scrapped after the Manchester synagogue terror attack.
(c) Sky News 2025: Palestine Action can still challenge terror ban after government loses court appeal
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