US President Donald Trump was ordered on Friday to halt construction of a ballroom on the site of the demolished East Wing.
The US Court of Appeals for the District of Columbia Circuit upheld a preliminary injunction won by the National Trust for Historic Preservation, which had sued Trump over the matter last year.
It was a major setback for Trump, who has touted the project, saying the White House needed a large ballroom to host events.
The court's ruling has been placed on hold for 14 days to allow the Trump administration to appeal the ruling to the US Supreme Court.
Trump confirmed the move, saying his team will be "immediately appealing" to the Supreme Court.
