Although the ban on openly gay troops was lifted on Tuesday, the Obama administration was arguing in court yesterday against a lawsuit which seeks full severance pay for those sacked under the law.

The American Civil Liberties Union is working on behalf of a former Air Force staff sergeant and 142 former troops who received only half of their expected severance pay after they were fired for being gay.

The Justice Department has asked the US Court of Federal Claims to dismiss the case. However, Judge Christine Odell Cook Miller said she was inclined to allow it to continue, Associated Press reports.

The military grants severance pay which can be halved by a number of conditions. These include discharge on the basis of homosexuality and unsuccessful drug or alcohol addiction treatment.

According to the ACLU, the policy of denying gay troops full severance pay is unconstitutional.

The case was brought by former Air Force Staff Sgt Richard Collins, who was discharged in 2006 after two civilians he worked with saw him kiss his boyfriend on the cheek while off-duty ten miles away from their base.

He expected to be paid $25,702 after his discharge but received just $12,351.

While the Obama administration is not defending the policy, it says that courts cannot rewrite military regulations.

Joshua Block, a staff attorney for the ACLU, said: “The government is too embarrassed to defend the constitutionality of its policy in open court, so it is inventing new reasons to deny these service members justice.

“These veterans served their country honourably and deserve the full recognition and benefits that are afforded to other service members. The sums they seek are small to the military, but make a huge difference when readjusting to civilian life.”