US President Barack Obama's immigration reform initiatives suffered another setback when an appeals court denied on Tuesday the US government's motion to lift an injunction imposed by a Texas judge.

In a 2-1 decision, the US Fifth Circuit Court of Appeals ruled that "the motion to stay the preliminary injunction or narrow its scope pending appeal is denied."

A total of 26 US states sued the US government last December against the implementation of the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) and the expanded Deferred Action for Childhood Arrivals (DACA) that could provide temporary relief from deportation to about 5 million undocumented immigrants in the US.

Last February, a Texas court issued an injunction against the immigration executive actions that prompted the US government to appeal.

The White House lambasted the latest court ruling. White House spokesman Brandi Hoffline said President Obama's actions were "squarely within the bounds of his authority," according to Reuters.

"Today, two judges of the Fifth Circuit chose to misinterpret the facts and the law in denying the government's request for a stay. As the powerful dissent from Judge Higginson recognizes, President Obama's immigration executive actions are fully consistent with the law," she said.

The suing states, all led by Republican governors, said Obama's immigration actions overstepped the law.

In its ruling, the appeals court said the suing states "have shown that issuance of the stay will substantially injure' them."

"A stay would enable DAPA beneficiaries to apply for driver's licenses and other benefits, and it would be difficult for the states to retract those benefits or recoup their costs even if they won on the merits," it said, citing Texas where at least 500,000 are potential beneficiaries of the immigration programs.

Texas Gov. Greg Abbott said with the new ruling, "The President's attempt to bypass the will of the American people was successfully checked again today."

The US Department of Justice is considering its next move following the decision.

Ben Johnson, executive director of the American Immigration Council, said the ruling "is indefensible, and we remain confident that the majority's legal reasoning will not stand."

He said federal courts have long recognized that the executive branch has the authority to set enforcement priorities, adding that since 1956, every US president has granted temporary immigration relief from deportation.

"Judge Stephen A. Higginson, in his dissent, got it right when he called out the 'political nature of this dispute' and argued that the courts have no role to play here. The courts simply cannot be a venue for anyone who disagrees with a President's policy choice," he said.

He said every day that the DAPA and expanded DACA implementation is delayed, families are forced to live in uncertainty and under constant threat of possible deportation.

"Finally, today's decision serves as reminder that broader, permanent reform is needed. Congress must do its job to enact immigration legislation that provides undocumented immigrants a full and meaningful shot at citizenship, helps the United States grow its economic prosperity, and reflects our proud history as a nation of immigrants," he said.