Feb 8 (Reuters) - A former Stanford University student can sue the government for mistakenly placing her on the no-fly list, a federal appeals court ruled on Wednesday.

A lower court had dismissed Rahinah Ibrahim's case, ruling that the Malaysian engineering student left the United States voluntarily and did not have enough ties to America to sue the government under U.S. law. But the U.S. Court of Appeals for the 9th Circuit disagreed, finding that Ibrahim did not leave her constitutional rights when she left the United States.

"The border of the United States is not a clear line that separates aliens who may bring constitutional challenges from those who may not," Judge William Fletcher wrote for a two-judge majority.

Ibrahim, a Stanford Ph.D. student, was living in the U.S. on a student visa, which gave her rights under the U.S. constitution. She was traveling to Malaysia in 2005 for an academic conference, when an airline employee discovered her name on the federal government's no-fly list. Instead of issuing her a boarding pass, the employee called the police, who locked her in an airport holding cell for two hours. While officials allowed her to fly to Malaysia the next day, she was never permitted to return to the United States.

Ibrahim sued in 2006, accusing the Department of Homeland Security and other government agencies of violating her constitutional rights to freedom of association, due process and equal protection. She said the flight restriction forced her to abandon her studies and hampered her professional development. The suit asked the court to order the government to take her off the no-fly list.

U.S. District Judge William Alsup dismissed the suit, finding that even though her inclusion on the no-fly list might be a "monumental mistake," she relinquished her constitutional rights by voluntarily leaving for Malaysia.

But two judges on the 9th Circuit panel disagreed, concluding that Ibrahim never intended to sever her ties with the country. While the appeals court did not rule on the merits of Ibrahim's constitutional claims, it allowed the case to resume before the district court.

A third judge, Kevin Duffy dissented, arguing that Ibrahim had no right to sue the federal government.

The reason Ibrahim is no longer in the United States is because her visa was revoked, likely due to her placement on the no-fly list, said Ibrahim's lawyer Marwa Elzankaly.

"The government is keeping her out of the U.S. and claiming she has no constitutional rights because she no longer lives in the U.S.," she said.

Charles Miller, a spokesman for the Justice Department, said the government was reviewing the ruling and had not yet decided whether to appeal the decision.

The no-fly list, shared with 22 foreign governments, prevents Ibrahim from flying on any U.S. carrier or over U.S. airspace, the court opinion noted. Tens of thousands of travelers have been accidentally included on the list because of misspellings, transcription errors and faulty computer algorithms, the court said.

The American Civil Liberties Union has sued the government on behalf of U.S. citizens, including several veterans, who have been placed on the no-fly list and can no longer travel for work or to visit family.

The 9th Circuit case is Ibrahim v. Department of Homeland Security et al, No. 10-15873.

For Ibrahim: James McManis and Marwa Elzankaly of McManis Faulkner.

For the government: Paul Freeborne, Douglas Letter and Joshua Waldman of the Justice Department.

(Reporting By Terry Baynes)

Follow us on Twitter: @ReutersLegal