A federal judge, alluding to works of Sophocles and Shakespeare, ordered the city to reinstate a permit for a graffiti celebration yesterday, calling the revocation “a flagrant violation of the First Amendment” that “cannot stand.”

A month ago, the city issued a permit to Ecko Unlimited, a Chelsea-based urban lifestyles company – it makes clothing, publishes a magazine, and creates video games – to block off 22nd Street between Tenth and Eleventh avenues tomorrow so that about 20 renowned graffiti artists of the 1980s can demonstrate their spray painting skills on two-dimensional replicas of the sides of old subway cars.

The Bloomberg administration revoked the permit last week, first saying the company had misrepresented the street festival as an art show rather than a commercial event, and then saying the sight of men and women decorating the life-size mock subway cars could “incite criminal behavior,” especially among youngsters.

On Friday, the company sued the city at federal District Court in Manhattan, saying the city’s Community Assistance Unit had no right to take away the permit.

In a forceful and colorful opinion, District Judge Jed Rakoff agreed.

The spokeswoman for the city’s Law Department, Kate O’Brien Ahlers, said officials were considering whether to appeal the decision.

Judge Rakoff, the same judge who declared the federal death penalty unconstitutional in 2002, wrote that the mayor’s claim that staging the exhibition would be tantamount to “encouraging vandalism” did not hold up.

“By the same token, presumably, a street performance of ‘Hamlet’ would be tantamount to encouraging revenge murder,” he wrote in his decision. “Or, in a different vein, a street performance of rap music might well include the singing of lyrics that could be viewed as encouraging sexual assault. As for a street performance of ‘Oedipus Rex,’ don’t even think about it.”

The judge added that the backdrops for the graffiti were not real subway cars, but two-dimensional metal canvases that are “plainly mock-ups.”

Plus, he wrote, the city’s laws don’t authorize denial of a permit because of a suspicion that a proposed activity might lead to criminal behavior. He said the city’s regulations allow denial of permits that are sponsored by people who lack “good character, honesty, integrity or financial responsibility,” but he said that in connection with the Ecko firm, none of those are in question.

“Consequently, in revoking the permit here, the city acted not only unconstitutionally but also beyond its prescribed powers,” Judge Rakoff wrote, ordering the city to reinstate the permit or be held in contempt of court.

Marc Ecko, who founded the company and says he has never personally vandalized a subway car, was exultant.

“Graffiti is an art form without borders, one which touches people of every gender, age, race, income class, and political affiliation on a daily basis and today’s decision is further affirmation that it is here to stay,” he said in a statement. “Graffiti does not, as some in City Hall have claimed, have to be a gateway to crime. It can also be a gateway to opportunity and success when channeled properly.”

Many of the artists who are expected to participate in the event started out writing graffiti on subways and other public areas but are now successful commercial designers and have displayed their work in prestigious museums.

Mr. Ecko invited Mayor Bloomberg to join him tomorrow afternoon at the event, an invitation the entrepreneur had first extended at a press conference Thursday. At the time, Mr. Bloomberg’s communications director, Ed Skyler, said there was no chance the mayor would accept the invitation.

Responding to the decision, Ms. Ahlers said in a statement, “We are disappointed in the judge’s ruling. We believe that the city’s denial of a permit to an exhibit which glorifies criminal activity was proper, and should have been upheld.”

The assistant general counsel for Ecko Unlimited, Gregg Donnenfeld, said that if the city attempts to appeal the decision, the company will continue fighting for its constitutional rights, all the way to the Supreme Court if necessary.

But he remained hopeful, saying, “At this point we do not anticipate any appeals, and instead, just look forward to what will be a spectacular art event for all of the public and New York’s art community to celebrate.”