A U.S. appeals court cleared the way Wednesday for President Donald Trump’s administration to reshape a $4 billion homelessness program by shifting funding away from permanent housing assistance and toward transitional housing and supportive services.

A three-judge panel of the Boston-based 1st U.S. Circuit Court of Appeals issued the ruling, allowing the changes to move forward. The decision reverses a lower court order that had blocked the administration from implementing the new approach.

The program in question provides federal grants to address homelessness across the country. Under the prior framework, a significant portion of funds supported permanent supportive housing. The administration seeks to prioritize transitional housing options along with services aimed at addressing underlying issues such as addiction and mental health.

Wednesday’s ruling means the administration can begin reallocating resources in line with its policy goals. Supporters of the shift argue that transitional models combined with targeted services offer more flexibility and better long-term outcomes than an exclusive focus on permanent placements.

The case stems from legal challenges by advocacy groups that sought to maintain the existing funding priorities. The appeals court found that the administration has the authority to adjust program guidelines.

This development comes as federal efforts to combat homelessness continue to draw scrutiny over effectiveness and cost. The $4 billion program represents one of the largest single sources of federal support in this area.