US court rules head of watchdog agency must keep his job, says Trump's bid to oust him was unlawful

US President Donald Trump.

The head of a federal watchdog agency must remain in his job, a judge in Washington has ruled, saying President Donald Trump's bid to remove the special counsel was unlawful.

US District Judge Amy Berman Jackson on Saturday sided with Hampton Dellinger, who leads the Office of Special Counsel, in a legal battle over the president's authority to oust the head of the independent agency that's likely headed back to the US Supreme Court.

Dellinger sued Trump last month after he was fired even though the law says special counsels can be removed by the president “only for inefficiency, neglect of duty, or malfeasance in office”.

Jackson, who was nominated to the bench by Democratic president Barack Obama, quickly reinstated Dellinger in the job while he pursued his case.

The ruling comes as Dellinger is challenging the removal of probationary workers who were fired as part of the Trump administration's massive overhaul of the government. A federal board on Tuesday halted the terminations of several probationary workers after Dellinger said their firings may have been unlawful.

The Justice Department says removal protections for the special counsel are unconstitutional and prevent the president from rightfully installing his preferred agency head.

Dellinger's lawyers say the special counsel is meant to be insulated from presidential interference because of the office's unique responsibilities to protect whistleblowers.