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WASHINGTON (CNN) -- In a potential boost for proponents of campaign finance reform, the U.S. Supreme Court Monday upheld limits on the amount of money political parties can spend in coordination with their candidates.

VIDEO CNN's Charles Bierbauer reports on a U.S. Supreme Court decision limiting coordinated expenditures between candidates and parties (June 25) Play video (QuickTime, Real or Windows Media)

By a narrow 5-4 majority, the court held that expenditures made by political parties on behalf of candidates that are coordinated with the candidates are subject to spending limits established by the Federal Election Commission.

However, the ruling does not apply to so-called "soft money" -- campaign funds spent by parties independently of candidate campaigns. In 1996, the court stuck down limits on independent expenditures.

In the majority opinion issued Monday, the court decided that coordinated expenditures were, in essence, contributions by parties to the campaigns of their candidates, which can be limited.

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"We hold that a party's coordinated expenditures, unlike expenditures truly independent, may be restricted to minimize circumvention of contribution limits," wrote Justice David Souter.

The ruling overturned a decision by the 10th U.S. Circuit Court of Appeals, which struck down the limits on coordinated expenditures in a dispute between the FEC and the Colorado Republican Federal Campaign Committee.

The decision comes as Congress considers overhauling the nation's campaign finance system, including measures to regulate and limit soft money. Critics who believe spending limits infringe on free speech are expected to challenge any campaign finance reform measure in court.

Monday's decision, though limited to the issue of coordinated spending, shows that a majority of the court believes that limits on contributions are permissible in some circumstances.

Souter was joined in the majority by Justices Ruth Bader Ginsburg, Steven Breyer, John Paul Stevens and Sandra Day O'Connor. Justice Anthony Kennedy joined the members of court's conservative wing -- Chief Justice William Rehnquist and Justices Antonin Scalia and Clarence Thomas -- in opposition.