The Conseil d'Etat gave the ruling following a request from the League of Human Rights to overturn the burkini ban in the Mediterranean town of Villeneuve-Loubet on the grounds it contravenes civil liberties, The Mirror reported.
The ruling could set a precedent for up to 30 other towns that imposed similar bans.
The court will make a final decision on the legality of the bans later.
Amnesty International welcomed the court's decision. The human rights group's Europe director, John Dalhuisen, said it had "drawn a line in the sand".
"French authorities must now drop the pretence that these measures do anything to protect the rights of women. These bans do nothing to increase public safety but do a lot to promote public humiliation," Dalhuisen added.
Opinions polls suggested most French people backed the bans, which town mayors said were protecting public order and secularism, BBC reported.
Muslims in France said they were being targeted unfairly.
The court said local authorities did not have the power to restrict individual liberties in this way without "proven risk" to public order.
According to the Independent, terror analysts have warned that the ban would fuel jihadi propaganda as terrorist groups like Islamic State attempt to portray France and other Western countries as at war with Muslims.
Former President Nicolas Sarkozy, who is seeking nomination in 2017 presidential election race, said he would bring in a nationwide burkini ban if elected to his former post.
Sarkozy controversially labelled the swimwear a "provocation" earlier this week.
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