A devout Christian couple will be allowed to provide weekend respite care for children under 10.
Eunice and Owen Johns were rejected by an adoption panel after it emerged that Mrs Johns, a Sunday school teacher, wanted any children in their care to go to church on Sundays.
The Johns also refused to teach children that gay and lesbian relationships are normal, as required by gay equality laws.
However, Derby City Council has now written to the Johns saying they will be allowed to offer respite care. The council has declined to comment on the climbdown.
The couple had said they would seek a judicial review of the adoption panel’s decision claiming they were being discriminated against because of their religion.
The Sexual Orientation Regulations would have been tested if the case went to judicial review.
The regulations came into force last year and ensure that gay, lesbian and bisexual people are treated equally with regards to goods and services, including adoption.
Under the regulations a local council cannot refuse to place a child with a same-sex couple.
In this case Derby council had also checked that any child placed with foster parents such as a child who is the victim of homophobic bullying or a child from a same-sex family will be placed with people who do not have negative views of gay people.
Similar questions are asked about prospective foster parents’ views on race, for example.
Mrs Johns, who has four adult children, told the Daily Telegraph:
“I really want this to be successful.
“We have a lot of love to give a child. But our religious beliefs are very important to us, and we felt that we had been discriminated against.”