The ruling comes nearly a week after Nice authorities initially ignored a ruling by the country's highest administrative court that declared the law forbidding swimwear worn by Muslim women was "clearly illegal".
Police in Nice had continued to target women on beaches wearing the Islamic swimwear despite the high court overturning the controversial ban.
But the city’s administrative court has now lifted the ban, ruling that the terror threat following Bastille Day attack in July did not justify it.
The court said: “The emotions and the concerns resulting from terrorist attacks, and especially from the attack on July 14, are insufficient grounds to legally justify the contested ban.”
It added that burkinis posed no risk to “hygiene, decency or safety when swimming”.
Nice was one of the first places to ban the modest swimsuits this summer, citing security after the terror attacks in July, as well as risk to public order and France's rules on secularism in public.
At least 30 fines have been issued in Nice since the burkini ban was introduced.
The ban was lifted in Cannes earlier this week on the basis that it was a violation of fundamental liberties, following a similar ruling in the Riviera town of Villeneuve-Loubet, which set a legal precedent.
The UN human rights office has condemned local bans in France on burkini swimwear as “a grave and illegal breach of fundamental freedoms” and a “stupid reaction” to recent extremist attacks.
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