If the stay is lifted, same-sex marriages will be legal in California.
The high-profile case is being watched closely by both supporters and opponents of same-sex marriage, as many say it is destined to make its way to the U.S. Supreme Court. If it does, the case could result in a landmark decision on whether people in the United States are allowed to marry people of the same sex.
Same-sex marriage is currently legal in five U.S. states -- Massachusetts, Connecticut, Vermont, Iowa and New Hampshire -- and in the District of Columbia, while civil unions are permitted in New Jersey.
"Proposition 8 fails to advance any rational basis in singling out gay men and lesbians for denial of a marriage license. Indeed, the evidence shows Proposition 8 does nothing more than enshrine in the California Constitution the notion that opposite-sex couples are superior to same-sex couples," Walker, who was appointed to the federal bench by former President Ronald Reagan, wrote in his opinion.
"Race restrictions on marital partners were once common in most states but are now seen as archaic, shameful or even bizarre," he added. "Gender no longer forms an essential part of marriage; marriage under law is a union of equals."
After the ruling, elated supporters gathered to celebrate the judge's opinion in San Francisco's Castro district.
"For our entire lives, our government and the law have treated us as unequal. This decision to ensure that our constitutional rights are as protected as everyone else's makes us incredibly proud of our country," said Kristin Perry, a plaintiff.
Perry and Sandy Stier, along with Jeffrey Zarrillo and Paul Katami, are the two couples at the heart of the case, which, if appealed, would go next to the 9th U.S. Circuit Court of Appeals before possibly heading to the U.S. Supreme Court.
Opponents of same-sex marriage have said their best bet lies with higher courts and have vowed to appeal the federal judge's ruling.
In a national survey conducted by Gallup in May, 53 percent of respondents said same-sex marriages should not be recognized by law, while 44 percent said they should.
Proposition 8 is part of a long line of seesaw rulings, court cases, debates and protests over the controversial issue of same-sex marriage. It passed in California with some 52 percent of the vote in November 2008.
"Big surprise! We expected nothing different from Judge Vaughn Walker, after the biased way he conducted this trial," Brian Brown, president of the National Organization for Marriage, said last week. "With a stroke of his pen, Judge Walker has overruled the votes and values of 7 million Californians who voted for marriage as one man and one woman."
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