The ruling on Thursday comes as the US Supreme Court weighs a similar request.
A three-judge panel of the Boston-based 1st US Circuit Court of Appeals declined to put on hold an injunction that a lower-court judge issued last week that has prevented USPS from enforcing the new rule it adopted at the Republican president's direction.
The fate of that rule will be decided soon by the 6-3 conservative-majority US Supreme Court. In a rare step, the administration did not even wait for the 1st Circuit to issue a decision before asking the high court to lift the injunction on Sunday.
Boston-based US District Judge Indira Talwani, an appointee of Democratic President Barack Obama, had issued the injunction on Friday at the behest of voting rights groups and numerous Democratic-led states.
In asking the 1st Circuit to lift Talwani's order, the US Department of Justice argued the plaintiffs' case appeared based on an unfounded premise that USPS intends to seize control of the administration of federal elections when it was instead adopting just a "modest" mail-related regulation.
But the three-judge panel, composed entirely of judges appointed by Democratic President Joe Biden, said that argument focuses on the "trees while ignoring the forest." The panel said that under the US Constitution, states and Congress have the authority to regulate elections, not the executive branch.
The court said it saw no error in Talwani's conclusion that allowing the rule to take effect "will likely result in the disenfranchisement of millions of voters across the country while providing minimal — if any — gains in combating voter fraud."
The appeal before the Supreme Court remains pending. It had previously lifted an earlier injunction Talwani issued that had blocked USPS from moving forward with the rule before it was finalised.
USPS issued the rule to implement an executive order the Republican president signed in March after years of Trump calling for tighter rules on voting by mail and pushing the false claim that his 2020 presidential election defeat to Biden was the result of widespread voter fraud.
All 50 states allow for some form of mail-in voting. Twenty-nine states allow voters to ask to cast ballots by mail without providing a reason, and eight conduct their elections entirely by mail.
Under the rule, states must supply the USPS with lists of mail ballot recipients, and all outbound and return ballot envelopes must bear unique barcodes.
The USPS, under the rule, may refuse to deliver ballots that do not comply with the new standards or are associated with voters who do not appear on the lists.
Talwani prevented the USPS rule from going into effect after concluding it risked disenfranchising voters, and was likely unlawful and adopted in violation of the US Constitution, which gives states the authority to administer elections.
