A U.S. district judge had blocked the policy from going into effect nationwide - days after it was unveiled in July - but the Supreme Court chose to reverse the decision in a brief order late in the day.
Curbing migration to the USA has been a key goal of his presidency and forms a major part of his bid for re-election in 2020.
Lawyers for the American Civil Liberties Union sued on behalf of four migrant aid groups, alleging that the new rule conflicted with a 1980 law and its open-door policy for asylum seekers.
"It is especially concerning, moreover, that the rule the government promulgated topples decades of settled asylum practices and affects some of the most vulnerable people in the Western Hemisphere - without affording the public a chance to weigh in". United States district judge Jon Tigar in San Francisco blocked the new policy from taking effect in late July. Tigar issued a new buy on Monday that reimposed a nationwide maintain on asylum plan. A three-judge panel of the ninth USA circuit court of appeals narrowed Tigar's order so that it applied only in Arizona and California, states that are within the ninth circuit. "The life of countless numbers of people are at stake".
Lee Gelernt, deputy director of the ACLU's Immigrants' Rights Mission, agreed - saying the rule "would eliminate virtually all asylum at the southern border, even at ports of entry, for everyone except Mexicans".
In practice the changes mean that migrants from Honduras, Nicaragua and El Salvador must first claim asylum in a neighbouring country or Mexico.
Illegal immigrant families turn themselves to U.S. Border Patrol to seek asylum following an illegal crossing of the Rio Grande in Hidalgo, Texas, on August 23, 2019.
White House spokesman Hogan Gidley said the Trump administration was "pleased" by the Supreme Court's decision, which he said rejected an "erroneous" ruling by the lower court judge.
The U.S. Supreme Court building at dusk on Capitol Hill in Washington.
The Trump administration has been harshly critical of what it sees as a relatively new judicial phenomenon where a single district judge halts a policy across the country before it can percolate through the lower courts and reach the Supreme Court.
"We are gravely disappointed the nation's highest court has lifted an injunction on a policy that-by barring asylum to anyone, including families and unaccompanied children who passes through a third country, is contrary to long-established USA practice", it said. The administration has claimed that it would like to shut the gap in between an preliminary asylum screening that most people today move and a ultimate determination on asylum that most men and women do not acquire.