The Trump administration has refused to back down over its bid to put a contentious citizenship question on the 2020 US census.
The move means that a court case will move forward over whether officials were motivated by racial bias in seeking to add it.
The Department of Justice told Maryland-based US District Judge George Hazel it has not made a final determination on whether to add the question even as President Donald Trump told reporters he is considering issuing an executive order to do it.
Judge Hazel, who had asked for a final decision from the government by today on whether it intended to press forward, issued an order saying the case will now move ahead.
Civil rights groups and some states strongly object to the citizenship question proposal, calling it a Republican ploy to scare immigrants into not participating in the census. That would lead to a population undercount in Democratic-leaning areas with high immigrant populations.
They say that officials lied about their motivations for adding the question and that the move would help Mr Trump's fellow Republicans gain seats in the US House of Representatives and state legislatures when new electoral district boundaries are drawn.
The Supreme Court last week blocked Mr Trump's first effort to add the question, faulting the administration's stated reason.
The legal fight seemed to be over earlier in the week when the government said it would start printing census forms without the citizenship question. But the battle reignited when Mr Trump reversed course via tweet.
"We're working on a lot of things including an executive order," Mr Trump told reporters today.
The US Constitution specifically assigns the job of overseeing the census to Congress, limiting the authority of the president over it, which could complicate an effort to add the question via presidential missive.
The judge rejected the administration's request that the case be put on hold, saying that an inquiry into the racial bias allegation would be relevant even if the government comes up with a new rationale for adding the citizenship question.
"Regardless of the justification defendants may now find for a "new" decision, discovery related to the origins of the question will remain relevant," Judge Hazel wrote, referencing the legal process for gathering evidence.
In May the challengers, including the American Civil Liberties Union, presented new evidence they said showed that the administration's plan to add the question was intended to discriminate against racial minorities.
Documents created by Republican strategist Thomas Hofeller, who died last year, showed he was instrumental behind the scenes in instigating the addition of the question.
Mr Hofeller concluded in a 2015 study that asking census respondents whether they are American citizens "would clearly be a disadvantage to the Democrats" and "advantageous to Republicans and Non-Hispanic Whites" in redrawing electoral districts based on census data.
The Justice Department told the Supreme Court that the notion that Mr Hofeller was behind the administration decision to add the question was a "conspiracy theory."
Under current law, states draw new districts based on total population. The Supreme Court endorsed that approach as recently as 2016, while reserving judgement on whether counting total eligible voters would be legal.
Mr Trump said the "number one" reason for adding the question was for the drawing of electoral districts, which is not the legal reason the administration originally gave for adding it.
He and his supporters say it makes sense to know how many non-citizens are living in the country. His hard-line policies on immigration have punctuated his presidency and 2020 re-election campaign.
The Supreme Court ruled that administration officials had given a "contrived" rationale for including the question. The court ruled that in theory the government can ask about citizenship on the census and left open the possibility that the administration could offer a plausible rationale to add the question.
The administration had originally told the courts the question was needed to better enforce a law that protects the voting rights of racial minorities.
The census is used to allot seats in the House and distribute some $800 billion in federal services, including public schools, Medicaid benefits, law enforcement and highway repairs.
A group of states including New York and immigrant rights organizations challenged the legality of the citizenship question, arguing among other things that the US Constitution requires congressional districts to be distributed based on a count of "the whole number of persons in each state" with no reference to citizenship. Three different federal judges blocked the administration before the Supreme Court intervened.
Even if a citizenship question is not included, the Census Bureau is still able to gather data on citizenship, which the Trump administration could provide to states.