Third sector organisations have threatened the department with legal action in the past because they said its system of grants, known as Section 64 awards, breached the Compact agreement that sets guidelines for relations between the sector and the state.
But Saskia Daggett, Compact advocacy manager at the NCVO, said complaints against the department had dried up in recent years and that it had become one of the best government funders.
"In the past, we had a lot of groups getting in contact with us because funding was late or not guaranteed over the long term," she said. "This meant organisations were having to lay people off. New applicants didn't know where they stood.
"We worked together with a lot of people to challenge the department and get this problem solved. The department has made a lot of effort and is now one of the government departments leading the way."
However, she said more pressure was needed to make primary care trusts follow Compact rules.
The department said it would spend £17m on 370 grants to national organisations this year, and another £7m on local projects.
"This year's round of grants will provide essential services for a wide range of people," said Ivan Lewis, the minister for care services. "I am pleased to support the work the third sector does."