By Lawrence Hurley

WASHINGTON (Reuters) - The U.S. Supreme Court avoided a ruling on transgender rights by sending a closely watched case involving bathroom access at a Virginia high school back to a lower court on Monday after President Donald Trump rolled back protections for transgender students.

Lawyers for a transgender student named Gavin Grimm, who was born female and identifies as male, had asked the justices to decide the case despite of the Trump administration's Feb. 22 action. The court previously had set arguments in the case for March 28.

The brief court order said that the case was sent back to the Richmond, Virginia-based 4th U.S. Circuit Court of Appeals, which last year ruled in favor of Grimm, "for further consideration in light of the guidance document" issued by the Trump administration.

Grimm sued the Gloucester County School Board to win the right to use the public school's boys' bathroom, saying the school's refusal violated federal anti-discrimination law and the U.S. Constitution's guarantee of equal protection under the law.

The 4th Circuit in April 2016 sided with Grimm based on the Obama administration's interpretation of the anti-discrimination law. It now gets a second chance to rule on the dispute, with its earlier decision wiped off the books.

The Trump administration rescinded landmark protections for transgender students ordered by former President Barack Obama last year that had permitted them to use bathrooms that matched their gender identity.

Obama's guidance said that transgender students were protected under a federal law barring sex discrimination in education. The Trump administration's move left the decision to the states.

The law involved in the case is Title IX of the Education Amendments of 1972, which applies to federally funded schools. The question of whether it covers transgender students remains unresolved and is likely to reach the high court at some time.

The case, which the justices in November had agreed to hear, would have been the Supreme Court's first case on discrimination against transgender people. It was among the most important cases the justices were due to hear during their current term, which ends in June.

The issue of allowing transgender people to use public bathrooms that correspond to their gender identity rather than their birth gender has become the latest flashpoint in the long U.S. battle over lesbian, gay, bisexual and transgender rights.

The matter heated up after North Carolina passed a Republican-backed law last year that required people to use bathrooms that corresponded to their gender at birth in government buildings and public schools. The North Carolina law also blocked local measures protecting lesbian, gay, bisexual and transgender people from discrimination.

The Obama administration in May 2016 issued its nationwide guidance telling public schools that transgender students should be allowed to use the bathroom of their choice, and indicated that states could lose education funding if they did not comply.

That action infuriated many conservatives and prompted a Republican-led legal effort to fight it. A total of 23 states sued to block the guidance. That lawsuit was dropped after Trump rescinded the guidance.

In the Virginia case, the Supreme Court in July 2016 voted 5-3 to temporarily block the appeals court decision from going into effect, a move that prevented Grimm from using the boys' bathroom when the new school year began in September while the case remained under appeal by the school district.

(Reporting by Lawrence Hurley; Editing by Will Dunham)