A judge ruled this week that claims of discrimination brought against a school by a 14-year-old Sikh pupil should be heard at the High Court.
But it was also decided that Sarika Watkins-Singh should not be allowed to return to Aberdare Girls' School in Rhondda Cynon Taf during any legal proceedings, a blow to London-based human rights group Liberty which has filed the challenge.
The legal battle, expected to be heard within the next two weeks, follows the exclusion of Miss Watkins-Singh by her school's governing body last November.
It took the disciplinary action after Miss Watkins-Singh refused to remove a steel bangle, called a Kara, one of the five Ks in Sikh religion. The governors decided it was against the school's code of conduct, which only allows a wrist-watch and a single pair of stud earrings as part of the uniform.
However, Liberty claims the decision is illegal and in breach of race relations as well as human rights laws. The group also argues that it contravenes a 25-year-old Law Lords decision to allow Sikh children to wear items representing their faith - including turbans.
Anna Fairclough, Liberty's legal officer, said she was pleased the case was going ahead but disappointed that its additional request for Miss Watkins-Singh to return to the school was rejected. The group is set to appeal against the decision.
"Nothing less than our traditions of religious freedom and racial tolerance are on trial here," she said.
"Individuals from any religion who wish to modestly express their faith should not be denied a proper education, as Miss Singh has."
Meanwhile, new guidance issued by the Assembly government in response to the high-profile case, says excluding pupils for breaking school uniform rules should only become an option as a "last resort".
All governing bodies in Wales have been issued with clearer, in-depth advice on good protocol in dealing with dress and jewellery.
The guidelines, which are not legally enforceable, state that headteachers should only enter disciplinary procedures with pupils for breaking school uniform rules after they have investigated the full facts and reasons behind the breach.
The guidelines go on to say that governing bodies and heads should "have regard" that they do not discriminate unlawfully on grounds of gender, race, religion, belief or disability.
The document, Guidance for Governing Bodies on School Uniform and Appearance Policies, further advises that exclusion should only be an option if breaches are persistent, are in "open defiance" of school rules, and all attempts to resolve the dispute have failed.
Miss Watkins-Singh, who has aspirations to become a lawyer and is the only Sikh pupil at Aberdare Girls' School, was taught in isolation for two months as she waited for a decision from the governing body on whether she would be allowed to wear the bangle. She is presently receiving home tutoring.
Liberty has previously supported the case of Aisah Azmi, suspended by the Headfield Church of England Junior School in Dewsbury for wearing the full Muslim veil, or niqab, while working as a teaching assistant.
A spokesperson from RCT said: "As this matter is the subject of legal proceeding, it would not be appropriate for us to comment any further. The current case essentially involves the school and the family."
For more on the new guidelines and why the Assembly government is advising schools to allow pupils to wear trainers instead of shoes, see page 5.