A federal appeals court late Tuesday ruled against Texas in its bitter clash with the federal government, deciding that a law allowing the state to arrest and deport migrants could not be implemented while the courts wrestled with the question of whether it is legal.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit, which has a reputation for conservative rulings, sided in its 2-to-1 decision with lawyers for the Biden administration who have argued that the law violates the U.S. Constitution and decades of legal precedent.

The panel’s majority opinion left in place an injunction imposed last month by a lower court in Austin, which found that the federal government was likely to succeed in its arguments against the law.

It was a setback for Gov. Greg Abbott but not an unexpected one: The governor has said that he anticipated the fight over the law’s constitutionality to eventually reach the Supreme Court. Mr. Abbott has said the law, which allows the state to arrest and deport migrants on its own, is necessary to deal with the record number of migrants crossing into Texas from Mexico.

Lawyers for the state could seek emergency action by the Supreme Court. Or they could let the decision stand and wait for arguments, set for April 3, over the substance of the law and whether the injunction was appropriately ordered.

The decision marked the latest development in a back-and-forth legal drama over the law, known as Senate Bill 4 or S.B. 4, a sweeping effort by Texas to create a state-level system of immigration enforcement in direct challenge to the federal government.

The law briefly went into effect this month amid a series of procedural rulings that made their way to the U.S. Supreme Court. A few hours later, an order by the Fifth Circuit panel again blocked its implementation.

The legal wrangling created confusion for police departments and sheriff’s offices in Texas, spread uncertainty along the border and caused the president and foreign ministry of Mexico to vocally object to a central provision of the law: that state courts could order migrants who crossed from Mexico to return to that country, no matter their national origin.

It was that provision that also appeared to most bother the Fifth Circuit’s chief judge, Priscilla Richman. During an hour of oral arguments over whether to pause the injunction, Judge Richman focused on the removal provision of S.B. 4, which she suggested conflicted with prior Supreme Court precedent.

“This is the first time it seems to me that a state has claimed that they had the right to remove illegal aliens,” she said during the hearing.