The ordinance violated the First Amendment right to free speech, U.S. District Judge Consuelo Marshall said in the strongly worded decision disclosed Tuesday by lawyers.
"This sends a strong message to municipalities that they can't eliminate the presence of day laborers in the street," said Pablo Alvarado, director of the National Day Labor Organizing Network, which filed the lawsuit against Redondo Beach.
City Attorney Mike Webb said he planned to appeal unless the City Council directed him otherwise.
"We have to address the residents' valid concerns," Webb said. "And we have to be able to stop people from running out in the street to solicit work."
In the 29-page ruling dated Friday, Marshall said citizen complaints about day laborers were "insufficient to justify preventing all laborers or other solicitors from engaging in speech."
The judge also said the city failed to show other areas where laborers could solicit work.
Marshall ordered city officials to tell police the ordinance could no longer be enforced. Police had suspended enforcement over the past year and a half while the case was pending.
Cities throughout the U.S. are dealing differently with increasing numbers of day laborers, many of whom are Hispanic and undocumented.
Some cities built day labor centers, while others have cracked down on workers when residents have complained of loitering. Anti-illegal immigration activists have filed suits against cities that use taxpayer funds to build the centers.
The ordinance in Redondo Beach had been on the books since the late 1980s. It was challenged in late 2004 after 60 day laborers were arrested in stings by undercover police officers posing as people seeking to hire workers.
City officials said they were responding to complaints of blocked traffic, drinking and urinating in public, and disrupting local businesses by loitering.
The National Day Laborer Organizing Network and the Mexican American Legal Defense and Educational Fund filed suit on behalf of the workers.
One of the men arrested was Braulio Gonzalez, 50, of Guatemala. He said day laborers clapped in celebration when they were told of the judge's decision.
"This is a victory for day laborers," said Gonzalez, who has been soliciting work in Redondo Beach for 24 years. "The police shouldn't bother us now."