WASHINGTON (Reuters) - U.S. government-funded Radio Free Europe/Radio Liberty said on Thursday that its parent agency had rescinded an order terminating its grant funding, after the news outlet sued the Trump administration over the cuts.

RFE/RL's sister organization, Radio Free Asia, followed its lead on Thursday and sued to block a move to cancel its funding.

RFE/RL, set up to reach people in communist-run countries during the Cold War, said its funding agreement for 2025 was "back in effect" after its parent organization, the U.S. Agency for Global Media (USAGM), notified it on Wednesday that the order had been rescinded. That move followed a U.S. District Court judge on Tuesday placing a temporary pause on the termination order.

On March 14, the Trump administration ordered the termination of federal grants that sustain the operations of RFE/RL and its sister agencies, Voice of America (VOA) and RFA, as part of sweeping efforts to downsize the U.S. government, dealing potentially fatal blows to the U.S. government-supported media outlets.

RFE/RL, which broadcasts to countries in Eastern Europe, including Russia and Ukraine, had sued last week to ensure that it receives about $77 million that Congress appropriated to it.

"This is an encouraging sign that RFE/RL's operations will be able to continue, as Congress intended. We await official confirmation from USAGM that grant funding will promptly resume based on the intention expressed in last night's letter," RFE/RL President and CEO Stephen Capus said.

USAGM and Kari Lake, President Donald Trump's appointee to oversee the agency, did not respond immediately to Reuters' requests for comment on what the rescinding of the order would mean for the news outlet's long-term funding.

U.S. lawmakers and rights advocates say the administration's drive to dismantle U.S. government-funded media outlets is a blow to Washington's hard-earned soft power in competition against China and other adversaries.

RFA's complaint, filed in the U.S. District Court for the District of Columbia, said that "denying RFA its congressionally appropriated funds violates federal laws - including the U.S. Constitution - which vests Congress with exclusive power over federal spending."

"RFA remains committed to fulfilling its Congressional mandate of providing a voice that counters the propaganda of the Chinese Communist Party and other authoritarian regimes in Asia," RFA President and CEO Bay Fang said in the statement.

RFA has broadcast across Asia since 1996. Rights activists say its multilingual reporters provide reliable news in authoritarian countries, raising awareness about the plight of oppressed minorities such as China's Uyghur Muslims.

Wholly dependent on government grants for its operations, RFA told U.S.-based staff last week that most would be put on unpaid leave, reducing the number of people working at the outlet from more than 300 to about 75.

VOA, set up during World War Two, has also sued to block the termination of its funding.