PeopleSoft's bosses have rejected a number of Oracle bids

In his judgement, US district judge Vaughn Walker said US anti-trust authorities had failed to prove that a takeover would stifle competition.

Instead he gave Oracle clearance to restart its $7.7bn (�4.3bn) bid.

The US Department of Justice may now appeal. Oracle has been chasing PeopleSoft for the past 14 months.

More hurdles

Shares of PeopleSoft, which like Oracle is based in California, rose 15% in after-hours trading following the ruling late on Thursday.

Oracle however still has a fight on its hands, as in addition to the likelihood of an appeal by the US Department of Justice, the European Commission has opened its own review of the takeover bid.

PeopleSoft continues to maintain that Oracle's offer is not high enough, and that its customers would suffer if it was taken over.

To date, PeopleSoft has rejected four separate offers from Oracle, including one of $9.4bn back in February when PeopleSoft's share price was higher.

Oracle's shares have fallen by 23% since it made its initial bid.