YouTube has blocked the 'innocence of muslims' video on its Egytian version of YouTube.
Egyptian Telecoms Ministry has refused to block access to Google's YouTube service and filed an appeal to reverse the court order to block access.
Earlier, a judge ordered to block the site for 30 days for hosting an 'anti Islamic' movie, "Innocence of Muslims" that sparked anger across the Muslim countries.
An Egyptian rights group, The Association for Freedom of Thought and Expression in Egypt (AFTE), has also appealed and called the judgement as 'collective punishment of all YouTube and Google service users'.
The rights group said: "Banning these websites will deprive internet users from the right of expressing themselves on those sites as well as depriving them of an important means of expression."
Citing high technical costs as main reasons for its refusal to block access to YouTube, the country's telecoms ministry added that they could not legally monitor the content of social media websites.
According to the BBC a Google spokesperson said the firm has worked hard to develop a community where everyone can enjoy and which allows people to convey different opinions.
"This can be a challenge because what's OK in one country may be offensive or illegal elsewhere," the spokesperson said.
"The authorities in Egypt have notified us of individual videos that they believe are illegal and, after a thorough review, we have blocked access to them on the Egyptian version of YouTube."
The trailer of the anti-Islam film had led to protests at US embassies in several countries including Egypt, Yemen, Sudan, Libya, Indonesia, Afghanistan, and Pakistan.