SAN FRANCISCO, California (CNN) -- An Air Force major who was dismissed for being a homosexual can continue her legal fight against the military, a federal appeals court ruled Wednesday.

The Ninth Circuit Court of Appeals let stand the military's "Don't ask, don't tell" policy, which bars the military from discharging gay or lesbian service members as long as they do not reveal their sexual orientation.

Yet the appeals court said the government may only "intrude upon the personal and private lives of homosexuals" to "advance an important governmental interest," such as maintaining troop readiness or improving morale.

The decision came in the case of Maj. Margaret Witt, who was discharged after a career of nearly 20 years on the grounds that she had a six-year relationship with another woman, a civilian.

Witt welcomed the decision.

"I am thrilled by the court's recognition that I can't be discharged without proving that I was harmful to morale," she said in a statement released by the American Civil Liberties Union of Washington state, which sued the Air Force on Witt's behalf in 2006.

"I am proud of my career and want to continue doing my job," said Witt, a flight nurse who according to the appeals court "was an outstanding Air Force officer" who received numerous commendations and medals.

"Wounded people never asked me about my sexual orientation," Witt said in the statement. "They were just glad to see me there."

Witt joined the Air Force in 1987 and had risen to the rank of major when a colleague contacted her in 2004 to say he had been assigned to investigate allegations that she was a homosexual, according to the court ruling.

The Air Force gave Witt an honorable discharge in July 2007 as a result of her having a relationship with another woman from 1997 to 2003.

At the time of the investigation, Witt served as a flight nurse and operating room nurse at McChord Air Force Base near Tacoma, Washington.

"The military has provided no evidence that her sexual orientation or conduct has caused a problem in the performance of her duties," the ACLU said when it announced the lawsuit in 2006.

A federal judge dismissed her lawsuit, but the appeals court revived it Wednesday.