ATLANTA - A federal appeals panel handed Georgia a victory Tuesday by overturning a lower court ruling that would have significantly restricted the main source of water for roughly 3 million people in metro Atlanta starting next year.

The decision by the 11th U.S. Circuit Court of Appeals found that Lake Lanier can legally be used to supply metro Atlanta with water, contrary to a nearly two-year-old ruling from U.S. District Court Judge Paul Magnuson. The appeals panel also tossed aside an order from Magnuson that would have sharply restricted water withdrawals from the lake next year to levels last seen in the 1970s, when the metro region was a fraction of its current size.

The case now heads back to the U.S. Army Corps of Engineers for a decision on whether metro Atlanta can get more water before the legal action proceeds.

Georgia Gov. Nathan Deal's office called the ruling a "great victory."

"This means that the Lake will continue to be available to meet Georgia's needs," Deal spokesman Brian Robinson said in a statement.

It was not immediately clear whether Florida and Alabama would appeal the ruling from the three-judge panel.

Striking down Magnuson's order improves metro Atlanta's hand at the bargaining table by eliminating what its political leaders considered an imminent, worst-case scenario. It also gives Georgia Gov. Nathan Deal more time to reach a political agreement that has historically proved elusive for years.

Lake Lanier was formed by damming the Chattahoochee River northeast of Atlanta. The river curves southwest around Atlanta, then flows along the border between Alabama and Georgia. The Chattahoochee and Flint Rivers merge at Lake Seminole on the Florida border and form the Apalachicola River, which empties into the Gulf of Mexico.

The ongoing legal feud centers around how much water metro Atlanta can take from the headwaters of a watershed that serves three states. Alabama and Florida have argued that Atlanta's consumption leaves too little water for communities downstream and harms valuable shellfish beds fed by the Apalachicola River.

The three states have fought over water rights in a series of lawsuits that started in 1990.

Atlanta never contributed to the cost of building the dam on Lake Lanier, which was completed around 1960, because a previous mayor thought water would never be in short supply. Lawyers for Alabama and Florida have argued that Congress authorized the dam to provide electricity, support navigation and control floods - not supply drinking water.

Attorneys for Georgia said that lawmakers always intended the U.S. Army Corps of Engineers would operate the hydroelectric dam in a way that kept the river flowing from it with enough water for Atlanta downstream. The case is especially important to Gwinnett County, a suburb of Atlanta that draws its drinking water directly from Lake Lanier.

Georgia had faulted the lower court judge for not weighing the harm his order could cause Atlanta before signing it.