The electoral commission announced on Wednesday that the judges had ruled that more than 500 candidates barred from Iraq's March 7 general election could stand after all.
Government spokesman Ali al-Dabbagh branded the ruling "illegal" and "unconstitutional."
The electoral commission said later it had asked the Supreme Court to rule on the legality of the judges' decision, while postponing the start of campaigning by a week to February 12.
The blacklist sparked tensions between the country's Shiite majority and its Sunni Arab former elite, alarming the White House and the United Nations which both expressed concerns about the election's credibility.
Washington on Thursday welcomed the judges' decision.
"We think it's a very useful step toward the election," State Department spokesman Philip Crowley told reporters.
"They (the government) should make sure that this continues to be an open process," Crowley told AFP, while insisting that it is an Iraqi process.
"We support the widest possible field of candidates, coming from each of the communities within Iraq, so that the end result is an election that produces a government that can govern effectively and can attract the support of the Iraqi people," he said.
"We would discourage any steps that we think will hamper the emergence of an effective, popular and legitimate Iraqi government."
The blacklist was compiled last month by an integrity and accountability committee responsible for ensuring that individuals from the former regime do not take part.
A senior election official told AFP on Wednesday that the barred candidates, who include people accused of being in Saddam's outlawed Baath party, can take part in the vote, subject to a post-ballot appeals procedure.
"They have the right to run in the election," said Hamdiyah al-Husseini from Iraq's Independent High Electoral Commission (IHEC).
"The appeal court will look at their file after the election," and if they find them to have links to Saddam's outlawed Baath party, "they will be eliminated," she said.
Dabbagh, however, said the government vehemently opposed the decision.
"The government underlines the importance of respecting Iraq's judicial and constitutional mechanisms to ensure that the rule of law applies to all," he said in the statement.
"Delaying the application of the (electoral) law on integrity and justice until after the elections is illegal and unconstitutional.
"The appeal decision goes beyond its powers because it is a duty to enforce the law on integrity and justice," Dabbagh added.
The law on integrity and justice was adopted on January 14, 2008 to replace the de-Baathification Committee, established by the Americans immediately after the US-led invasion in 2003.
It saw thousands of Saddam-era employees lose their jobs, before many of them joined the insurgency that followed the invasion.
US Vice President Joe Biden proposed the disqualifications be deferred until after the election during a visit to Baghdad in January at the height of the crisis over the blacklist, according to President Jalal Talabani's office.
As well as Baathists, the blacklist, which includes both Shiites and Sunnis, covered alleged members of Saddam's once deadly Fedayeen (Men of Sacrifice) militia and Mukhabarat intelligence division.
The March 7 election, the second in Iraq since Saddam's ouster, is seen as a test of reconciliation between the Sunni minority dominant under the former dictator and the Shiite majority represented by the present government.
Leaders must "balance the critical need for justice and accountability of those that have in the past been part of oppressive regimes and the need for peace, reconciliation and inclusion in the democratic process," the UN secretary general's envoy to Iraq Ad Melkert said on Wednesday.
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