ATLANTA — A federal appeals panel has tossed a lower court ruling that would have severely restricted the main water source for roughly 3 million people in metro Atlanta.

The ruling Tuesday by the 11th U.S. Circuit Court of Appeals overturned a 2009 order from U.S. District Court Judge Paul Magnuson. His order would have starkly cut Atlanta's ability to take water from Lake Lanier starting in July 2012 unless the governors of Georgia, Alabama and Florida can reach an agreement ending the long-running water dispute.

Magnuson gave Georgia a three-year deadline to either find another source of water, have Congress reauthorize the lake to be used as a source of drinking water or negotiate a water-sharing agreement with Florida and Alabama, which also have a stake in the water that flows from Lake Lanier down the Chattahoochee River to the Apalachicola Bay.

Nearly two years after that ultimatum, none of those events have occurred.

The appeals court says the U.S. Corps of Engineers must first issue a final decision on whether Georgia can have more water before legal challenges can proceed.

Lawyers for Georgia say Congress always intended the lake would supply Atlanta with water.

 Ashley Fielding contributed to this article.