Israel's Supreme court overruled on Wednesday a parliamentary panel which had decided to bar Israeli Arab parties from running in next month's parliamentary election.

The court issued its decision in response to an appeal filed by Arab politicians against the ban. A spokesman for the Courts Administration said judges overturned the ban in an unanimous vote Wednesday.

In response to the court decision, Israeli Arab MK Ahmed Tibi said: "We have defeated fascism, but this battle is not quite complete, discrimination has become centralized. We will finish this operation in Israel on the day of elections."

The Central Elections Committee (CEC) last week banned the Arab parties United Arab List-Ta'al and Balad from running in February's parliamentary elections amid accusations of racism from Arab MKs.

Arab faction delegates in the CEC walked out of the hall before the vote, shouting, "this is a fascist, racist state." As they walked out, CEC deputy chairman MK David Tal (Kadima) and the Arab delegates pushed each other and a Knesset guard had to intervene and separate them.

The CEC voted overwhelmingly in favor of the motions, accusing the country's Arab parties of incitement, supporting terrorist groups and refusing to recognize Israel's right to exist, against the background of Israel's offensive in the Gaza Strip.

The requests to ban the Arab parties were filed by two ultra right parties Yisrael Beiteinu and National Union-National Religious Party.

In response to the Supreme Court's decision, Yisrael Beitenu Chairman Avigdor Lieberman on Wednesday called the ruling "unfortunate, since no boundary was established to prevent the disloyalty of some of the Arab MKs toward the state of Israel."

Lieberman added that "[former chief justice] Aharon Barak once said that a democracy does not need to kill itself to prove its vitality. The court threw away this declaration and in fact gave the Arab parties license to kill the state of Israel as a Jewish democratic state," adding that his party will not back down. "In the next Knesset, we will pass a citizenship law that will prevent the disloyalty of some of Israel's Arabs," he said.

The new Meretz movement welcomed the court's decision in a statement, saying "we are happy that the Kahanism that has characterized that political establishment, including Kadima and Labor, hasn't reached the justice system," referring to the party of Meir Kahane, which was in fact banned from participating in parliamentary elections over its extreme right wing views.

"Kadima and Labor will have to do some deep soul searching over their populist, senseless decisions that sought to prevent the representation of Israel's Arab citizens in parliament," Meretz's statement said.

Sports, Culture and Science Minister Raleb Majadale, the only Israeli Arab minister serving in the Knesset, also welcomed the court's decision, saying that "the court didn't yield to extremism and racism. In a democratic society, it is fitting that all minorities will be represented in the government."

Last week, after the elections committee issued the ban on the Arab parties, Balad warned that if the court were to uphold the committee's decision, the party would call for a boycott of the elections and establish an alternative Arab parliament.

Muslim and Christian Arabs make up about 20 percent of Israel's 7.4 million citizens. There are 10 Arab lawmakers in the 120-seat Knesset.