Police banned the soup kitchen last month, arguing that the handouts discriminated against Jews and Muslims who do not eat pork on religious grounds.
The administrative court said the distribution was "clearly discriminatory", but could not be stopped because the organizers offered to feed anyone who asked for help.
Mayor: Initiative stinks of xenophobia
The mayor of Paris condemned the ruling and urged the police to appeal the ruling.
"Faced by this initiative which stinks of xenophobia, I want once again to express city hall's desire to fight all forms of discrimination, racism and anti-Semitism," Mayor Bertrand Delanoe said in a statement.
The food handouts are organized by a nationalist group called Solidarity of the French (SDF). It says its "pig soup," which uses pork fat for stock, is country fare much loved by French traditionalists.
"No-one has ever been able to prove that anyone has been refused soup or clothes on the grounds of their religion or race," SDF lawyer Frederic Pichon told France Info radio after Tuesday's court decision.