The Trump administration has notched up a significant victory in its battle over the future of consumer protection in the US after a federal judge refused to block the president’s choice for acting head of the Consumer Financial Protection Bureau.

US district judge in Washington, Timothy Kelly, declined on Tuesday to impose an injunction on Trump’s appointment of budget director Mick Mulvaney, who is a leading opponent of pro-consumer regulations, to lead the government watchdog. The ruling came in a lawsuit brought by Leandra English, who had been given the job of interim director of the bureau on Friday by its outgoing chief Richard Cordray.

Announcing his decision, Kelly paid lip-service to the executive powers of the White House. “Denying the president’s authority to appoint Mr Mulvaney raises significant constitutional questions,” he said.

The White House was quick to claim political victory over the Democrats who had been backing English in the dispute. “The administration applauds the Court’s decision, which provides further support for the president’s rightful authority to designate director Mulvaney as acting director of the CFPB,” said the deputy White House press secretary Raj Shah.

He added: “It’s time for the Democrats to stop enabling this brazen political stunt by a rogue employee and allow acting director Mulvaney to continue the bureau’s smooth transition into an agency that truly serves to help consumers.”

The spat between Mulvaney and English has become a lightening rod in the past few days for the clash of political ambitions of a presidency that wants to cut regulations and roll back the influence of the federal government and progressives determined to protect consumer interests in the wake of the 2008 financial crash. Under Cordray, the CFPB was seen as an important break on the big banks as part of the Dodd-Frank reforms under which it was created.

Mulvaney took up his position as acting director on Monday despite the dispute over who was to hold the position until a permanent leader could be nominated and approved by the US senate. He immediately set about imposing a 30-day freeze on any new hires.

He also sent out on Tuesday morning a note to all CFPB staff telling them to “disregard any email sent by, or instructions you receive from, Ms English when she is purporting to act as the acting director”.

Kelly was nominated by Trump to sit on the bench of the Washington US district court and only took up position in September.

After the judge issued his decision, the lawyer acting for English, Deepak Gupta, told reporters that they would appeal.