President Donald Trump's executive order (EO) putting an end to birthright citizenship faced another legal setback after a federal appeals court on Wednesday ruled it to be unconstitutional.

The 9th U.S. Circuit Court of Appeals in San Francisco affirmed a lower court's decision blocking the nationwide enforcement of the EO, which would deny citizenship to babies born to people illegally or temporarily in the U.S.

A three-judge panel ruled against Trump's plan in a 2-1 vote, keeping a decision first made by U.S. District Judge John C. Coughenour in Seattle in place.

"The district court correctly concluded that the Executive Order’s proposed interpretation, denying citizenship to many persons born in the United States, is unconstitutional. We fully agree," the majority wrote.

Though the Supreme Court has since restricted lower courts from issuing nationwide injunctions, the majority in the 9th Circuit ruled against the EO after discovering the case fell under an exception left open by SCOTUS justices.

States filed the case against the Trump administration after arguing that a nationwide order is needed to block the EO in order to prevent problems that would arise from birthright citizenship being outlawed in some states.

"We conclude that the district court did not abuse its discretion in issuing a universal injunction in order to give the States complete relief," wrote Judges Michael Hawkins and Ronald Gould, both of whom were appointed by former President Bill Clinton.

Judge Patrick Bumatay, a Trump appointee, dissented after deciding that states don't have the legal right or standing to sue the Trump administration over this.

He did not weigh in on the constitutionality of ending birthright citizenship.

The Citizenship Clause of the 14th Amendment states that people born or naturalized in the U.S., or "subject to United States jurisdiction," are American citizens, but Department of Justice attorneys argue that does not mean children are automatically American citizens based solely on birth location.

Trump's EO would deny American citizenship to a child born to a mother without legal or permanent status in the U.S., and whose father does not hold legal or permanent status. (Fox News)