MADISON, Wis. — A Madison-based group can sue the federal government over claims that President Bush's faith-based initiative is an unconstitutional endorsement of religion, a federal appeals court panel has ruled.

A three-judge panel of the 7th Circuit Court of Appeals on Jan. 13 reinstated the lawsuit brought by the Freedom From Religion Foundation that claims Bush's program violates the separation of church and state. The program helps religious groups get government funding to provide social services.

The panel, overturning a 2004 decision by a federal judge in Madison, said the foundation did have legal standing to sue over the administration's use of taxpayer funds for the program.

"We will now be able to challenge the constitutionality of the creation of the White House faith-based initiatives and the conferences and activities that they support," Annie Laurie Gaylor, co-president of the foundation, said Jan. 14. "Bush says this is constitutional, but it's never been tried by the courts. So we're pleased."

Bush sidestepped Congress by issuing executive orders to create the White House Office of Faith-Based and Community Initiatives and similar centers in 10 federal agencies during his first term. He said the goal was to help religious and community groups compete for federal funding to fight poverty, substance abuse and other social problems.

The 5,000-member Freedom From Religion Foundation filed suit against the administration in 2004 arguing the initiative violated the establishment clause in the First Amendment. The lawsuit claimed the program illegally favored faith-based groups over secular ones.

Among the activities challenged were national and regional conferences where officials from federal agencies educate religious groups about how to obtain government grants. The foundation said the conferences resembled religious revival meetings and were an unconstitutional use of tax dollars.

Messages left at the White House's faith-based office and the U.S. Attorney's office in Madison were not returned. The government could ask the full appeals court to rehear the case or appeal the ruling to the U.S. Supreme Court.

If it stands, the ruling will allow discovery to go forward so opponents can find out more about what happens at the conferences, George Washington University law professor Ira C. Lupu said on Jan. 14.

He said the case was the broadest national challenge to Bush's initiative, but that the group faced an "uphill battle" proving it is unconstitutional.

"The case has been brought back to life, but I think it's going to be rather difficult for the Freedom From Religion Foundation to prevail," said Lupu, who is tracking the case for the Roundtable on Religion and Social Welfare Policy. That group studies government partnerships with faith-based organizations.

"My guess is that no government official gets up at those conferences and says something about the gospel of Jesus Christ being the truth," Lupu added.

U.S. District Judge John Shabaz in Madison dismissed the lawsuit in November 2004, ruling that taxpayers had no standing to challenge funding appropriations made by the executive branch, only those earmarked for specific purposes by Congress.

But a panel of the Chicago-based appeals court voted 2-1 to reverse Shabaz's decision and reinstate the lawsuit. In the majority opinion written by Judge Richard Posner, the court said taxpayers could challenge executive-branch programs that allegedly promote religion using taxpayer funds.

Posner said judges would later have to decide the merits of the case and whether the conferences amount to "propaganda vehicles for religion," as critics contend.

The majority's reasoning "makes virtually any executive action subject to taxpayer suit," Judge Kenneth Ripple wrote in his dissent.