The fund's Strategic Grants Committee reviewed the grant, frozen in August following an intervention by Home Secretary David Blunkett, but decided that the NCADC had not broken the law and the grant should go ahead.
But the NCADC had to agree to two further conditions. First, that the policies of its activities and publications should not be "doctrinaire" and second that it should not use lottery funds to oppose the deportation of convicted terrorists.
Chair Diana Brittan said: "We support the valuable work the group does with individuals."
But Culture Secretary Tessa Jowell said she still had "doubts" about the NCADC although she said the fund had the right to make grant decisions without political interference.
(Newsmaker, page 13).