Short answer: Yes.
Long answer: If we assume that the object being photographed is relatively still we can as xriso said,
'If your super spiffy spy satellite grabs 5 images, 1 second apart, ...
take multiple pictures, since the satellite is moving these pictures are separated by a distance. This effectively increases the aperture, D, that El Puerco Loco spoke about. This in turn increases the angular resolution by:
θ = 115.8/D (Loco's formula).
This is known as Synthetic Aperture. It is often used with radar. I suspect it could also be used with light.
Now xriso brought up the atmosphere. This is a problem. However, courtesy of SDI research, or Star Wars, of Ronald Reagan fame, we can mitigate this to a degree with a deformable mirror. Here is how it works. The satellite takes a picture of a known object on the ground. By finding the differences of what it sees and what it is supposed to see, deformations are put into a mirror in real time to correct for the error.
Finally, we have the signal processing that
xriso spoke about. So to answer the question, Can a satellite read your license plate? The technology exists. So why not use it? In the late 80's we bombed Libya. Remember? President Reagen came on the evening news and showed some photos proving the Libyan's were up to no good. I thought the pictures of Elvis on Mars were more convincing. At the time I was working with the Airforce at a national lab. One of the Captains addressed my thoughts. "Reagan had A LOT BETTER pictures than what he showed on TV!!" The reason was clear. You never want your adversary know what you are capable of. The real issue is that we should always wave kindly to the eyes in the sky. O'Reilly asks, 'Who's looking out for you?' I don't know, but I do know that the government has the ability to look at you!