The Olympic and Paralympic track star is currently serving a five year prison sentence after being convicted in October of culpable homicide after a seven-month trial. A murder conviction might see him jailed for at least 15 years.
During the trial, the state failed to convince judge Thokozile Masipa of Pistorius' intent to kill when he fired, leading to his conviction for negligent killing or culpable homicide.
On Friday, Masipa ruled that state lawyers could proceed with their challenge to the verdict she gave in October.
"In my view, to entertain this application would be tantamount to reviewing my own decision ... Accordingly the order that I grant in this matter, is to strike off the application," she said in response to a plea by Pistorius's legal team, which had sought to block the state's appeal.
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It was not immediately clear when the state's appeal over the original ruling would be heard.
Pistorius, who lost his lower legs as a baby, said he accidentally shot Steenkamp after mistaking her for an intruder at his home but prosecutors sought to prove during his trial that he had killed her after an argument.
Masipa's decision to rule out murder was criticised by legal experts as an erroneous interpretation of the law.
By the time the appeal is heard before a panel of South Africa's most senior judges, Pistorius could be out of prison as his five-year sentence only requires that he serves 10 months behind bars and the balance under house arrest.
(Reporting by Stella Mapenzauswa; Editing by James Macharia)
