Whenever people attack theonomy by saying it promotes salvation by works, ask them to define their terms.
Theonomy, as I understand it, has 3 basic meanings:
1) It means literally “God’s law.” “The word theonomy is simply a combination of the Greek words for God and law, theos and nomos.” (William Einwechter, “Family Squabble,” Part I [footnote 6])
In this sense, all true Christians are theonomists, since all true Christians uphold God’s law (while sometimes disagreeing on the validity of certain laws for today) . All who are born again will naturally love God’s law and bear good fruit in obeying God’s law (albeit imperfectly).
Professing Christians who reject this first meaning of theonomy are guilty of the heresy of antinomianism, which is just as damnable as believing one is saved or justified by works (cf. 1 John 2:3-5; Jude 1:4).
Thus one cannot be a Christian and not consider oneself a theonomist (in this context.)
2) It can mean the hermeneutic that all standing O.T. commands are mandatory for Christians today to follow unless they are modified in the N.T.
The only other (ostensibly) consistent hermeneutic is the Dispensational one, which says for Christians, everything in the O.T. is repealed unless it is repeated in the N.T.
The former hermeneutic has historically been upheld by Reformed Christians, who were the most important and influential group in the Protestant Reformation. And the Protestant Reformation by and large was premised on salvation by grace, not by works.
Moreover, the Dispensational hermeneutic is relatively new. Dispensational theology came about in the 1800s, when it was invented by John Nelson Darby and C.I. Scofield.
So if this meaning of theonomy is heretical, then pretty much the mainstream Protestant Reformers were lost.
Moreover, the view that all standing O.T. commands are mandatory for Christians today to follow unless they are modified in the N.T. is biblical.
One cannot get around the force of such passages as Deuteronomy 4:2, Matthew 5:17-20 and 2 Timothy 3:16, 17, which, taken in light of the entire Bible, teach us that all Older Testament standing laws are binding today unless modified elsewhere in Scripture (for instance, Hebrews 10:1 alters the way or manner of observing the sacrificial system).
While I believe many true Christians hold to the Dispensational hermeneutic, this hermeneutic is not only flawed, but dangerous, since it truncates more than half of the Bible as a standard of living. (And in its more extreme forms is heretical, since some Dispensationalists teach that one can be a “carnal Christian,” that is, one can be born again and not bear good fruit.)
And so while there are some Christians who are not theonomists according to this meaning, this view of theonomy is biblical, and therefore in this sense all Christians should be theonomists.
3) The second meaning of theonomy logically leads to the third meaning, which says, with perhaps some exceptions, that the O.T. civil code applies today, since it has not been abrogated by any N.T. passage.
In this sense all Christians should be theonomists. And it is absurd to argue that upholding the O.T. civil code promotes salvation by works.
After all, can we really say believing in separation between church and state, due process, restitution, and execution of kidnappers leads to salvation by works?
Must we deny Jesus is King of kings in order to avoid salvation by works? Must we affirm public slavery (the prison system), socialism, abortion, and other unjust practices in order to reject salvation by works?
There are, tragically, those who hold to salvation by works who do hold to those 3 basic definitions of theonomy (for instance, some in the heretical Federal Vision circles), but theonomy is in no way necessarily linked to salvation by works, and, as I have already argued, all true Christians are theonomists in the first sense, and should be theonomists in the second and third senses.
What is “Theonomy”? by Greg Bahnsen (Disclaimer: We do not endorse some of the products on this site, which promote the Federal Vision heresy)
Right with the Law? A Theonomic Response to Rev. Maurice Roberts by Daniel F.N. Ritchie
Greg Bahnsen is not in the Federal Vision Camp by John M. Otis
Federal Vision and Theonomy: Not the Same by Daniel F.N. Ritchie
Christian Reconstruction: What’s Good, What’s Bad: Part 1 by Brian Schwertley
Christian Reconstruction: What’s Good, What’s Bad: Part 2 by Brian Schwertley
 Greg Bahnsen defines “standing law” as the following: ““Standing law” is used here for policy directives applicable over time to classes of individuals (e.g., do not kill; children, obey your parents; merchants, have equal measure; magistrates, execute rapists), in contrast to particular directions for an individual (e.g., the order for Samuel to anoint David at a particular time and place) or positive commands for distinct incidents (e.g., God’s order for Israel to exterminate certain Canaanite tribes at a certain point in history). Greg L. Bahnsen, No Other Standard: Theonomy and its Critics (Tyler, TX: Institute for Christian Economics, 1991), 12, footnote 26.