WASHINGTON (Reuters) - A U.S. judge on Wednesday upheld the federal government's rules that allow funding of human embryonic stem cell research, ruling for the Obama administration.

U.S. District Judge Royce Lamberth ruled the U.S. National Institutes of Health (NIH) guidelines on such research do not violate federal law and he dismissed a legal challenge to the funding.

Lamberth a year ago had halted the funding of the research. But he was reversed in a ruling by a U.S. appeals court in April. His latest decision was largely based on the appeals court's reasoning and conclusions.

Opponents of human embryonic stem cell research, including many religious conservatives, have argued that it is unacceptable because it destroys human embryos.

Scientists hope to be able to use stem cells to find treatments for spinal cord injuries, cancer, diabetes and diseases such as Alzheimer's and Parkinson's.

Shortly after taking office in 2009, President Barack Obama expanded federal funding for research involving human embryonic stem cells in hopes it would lead to cures for diseases.

Lamberth ruled on Wednesday against two researchers, Dr. James Sherley, a biological engineer at Boston Biomedical Research Institute, and Theresa Deisher, of Washington-based AVM Biotechnology, who had sued to block such funding.

The judge rejected their argument that the funding violated federal law. Following the appeals court, he said he must find that the federal government reasonably interpreted federal law to permit the funding.

He also rejected the argument that the government acted arbitrarily and capriciously in coming up with the guidelines.

(Reporting by James Vicini and Jeremy Pelofsky, Editing by Philip Barbara)