A federal judge in Texas has ruled that a longstanding programme protecting migrants who came to the US as children from deportation is unlawful.
The judge, however, did not grant a request to terminate those protections over the next two years.
Nine Republican-led states sued to end it, claiming they have to spend millions of dollars to support illegal immigrants living in the US.
More than half-a-million people – known as Dreamers – are currently enrolled.
In his Wednesday ruling, Judge Andrew Hanen kept the programme closed to new applicants but suspended part of the ruling to allow current Daca recipients to renew their enrolment. He said he was “sympathetic” to their situation.
Judge Hanen said he believes the fate of the programme should be decided by the US congress rather than by the courts or the president.
The Biden administration is expected to appeal the ruling, potentially setting the stage for a showdown at the US Supreme Court.
In a statement on Wednesday evening, the White House said it is “deeply disappointed” in the ruling and “will continue to defend this critical policy from legal challenges”.
The federal programme was brought in by Barack Obama’s administration in 2012.
To be eligible, migrants must have arrived in the US before turning 16 and before June 2007, been under 31 as of June 2012, been in school or graduated high school, and have no legal status in the US.
It shields recipients from deportation and allows them to be granted work authorisation, get a driving licence, and apply for education financial aid. It does not provide a pathway to citizenship.