Attorney General Ken Paxton called the ruling "outrageous" and vowed to appeal the decision with the 5th Circuit. The ruling is the latest loss for Texas on the issue of voting rights.
A federal court blocked Texas voter ID law Senate Bill 14 during the 2016 election, and a second measure -- SB 5 -- was put into place that allowed voters who had no photo ID to vote by signing a declaration.
Judge Nelva Gonzales Ramos of the Southern District of Texas said Wednesday that the second law, signed by Gov. Greg Abbott in June, was an improvement but fell "far short of mitigating the discriminatory provisions of SB 14."
She wrote that using a declaration trades one obstacle for another one that threatens severe penalties for perjury.
"While the (declaration) requires only a signature and other presumably available means of identification, the history of voter intimidation counsels against accepting SB 5's solution as an appropriate or complete remedy," Ramos writes in her decision to issue permanent injunctions against both measures.
Both laws discriminate against many blacks and Latinos, she says.
"SB 5 perpetuates the selection of types of ID most likely to be possessed by Anglo voters and, disproportionately, not possessed by Hispanics and African-Americans," she writes.
Paxton said the new law safeguards the integrity of elections and prevents voter fraud.
"Today's ruling is outrageous," Paxton said in a statement. "Senate Bill 5 was passed by the people's representatives and includes all the changes to the Texas voter ID law requested by the 5th Circuit," Paxton said.
The ruling is also a setback for the Trump administration, which had argued that the interim law "removes any discriminatory effect or intent the court found in SB 14 and advances Texas' legitimate policy objectives in adopting a voter ID law."
Voting rights groups praised the ruling.
"Time and time again, federal courts have made it clear that Texas's strict voter photo ID law is discriminatory," said Danielle Lang, senior counsel for Campaign Legal Center. "It doesn't matter how many times the state tries to dress the law in sheep's clothing -- its intent is to discriminate and prevent hundreds of thousands of eligible voters from casting ballots. Now Texas must return to nondiscriminatory ID practices in voting, which do not require photo ID."
"Another major victory in our Texas Voter ID case," tweeted Kristen Clarke, president and executive director of the Lawyers' Committee for Civil Rights Under the Law.
The Texas secretary of state's website currently says voters must show one of seven forms of approved voter ID.
- Texas driver license
- Texas Election Identification Certificate
- Texas personal identification card
- Texas license to carry a handgun
- United States military identification card
- United States citizenship certificate
- United States passport
If they don't have one of those, they may vote by signing a declaration at the polls explaining why not and provide supporting documentation, like a certified birth certificate or utility bill.
The ruling has the potential of putting Texas back under restrictions of the Voting Rights Act. If that happens, Texas might be required to seek federal approval before changing election laws. Judge Ramos set an August 31 deadline for the two parties to submit briefs to request a hearing to begin to consider that matter.
The sides each declined a previous offer.
Ramos has twice previously ruled on this case, known as Veasey v. Abbott. In 2014, she rejected the law as "an unconstitutional poll tax."
In April she said the law "had a discriminatory impact" and that there had been a "pattern of conduct unexplainable on grounds other than (the) race factor."
In Wednesday's ruling she said the state had not meaningfully improved the types of photo IDs that can be used and that she believes Texas has the most restrictive list in the nation.
The plantiffs' suit would leave a section of SB 14 in place, one that increased penalties for certain types of voter fraud, like voting more than once or impersonating another person.
CNN's Sophie Tatum, Madison Park and Ralph Ellis contributed to this report.