The government has put on hold implementation of the anti-lobbying clause, after criticism from sector bodies.
In February, the Cabinet Office announced that a clause would be inserted into all new or renewed central government grant agreements from 1 May to prevent such funds from being used to lobby or attempt to influence parliament, local government or political parties. But in April it said it was considering "the comments of all interested parties" and was pausing implementation "pending a review".
The statement said a decision on the form of the clause would be taken after a review.
No date for when the policy will be implemented has been announced, and no formal consultation has been launched.
The National Council for Voluntary Organisations, Acevo and Social Enterprise UK said in a joint statement: "We are pleased to see that the government has 'paused on implementation' of its anti- lobbying clause.
"We continue to call for the full and immediate withdrawal of this policy. The clause, as it stands, goes much further than it says on the tin and will deter many charities and social enterprises from making representations to government and parliament.
"We look forward to hearing more from government on how they will proceed - in particular, we have asked them to consider a formal consultation with the charity sector and other affected bodies."