A primary care trust has withdrawn a request to 18 voluntary organisations to return funding that it had already awarded to them this financial year.
NHS North Yorkshire and York told the organisations in October it wanted funding from November onwards returned because of "serious financial pressures".
In a Westminster Hall debate this month, MPs branded the short notice given to charities "despicable" and "a disgrace", in breach of the Compact.
The PCT's actions also prompted Paul Burstow, the care services minister, to write to Sir David Nicholson, the chief executive of the NHS, asking him to consider ways of making health organisations "act responsibly" towards voluntary organisations when making cuts.
However, following talks with NHS Yorkshire and the Humber, the regional strategic health authority, the PCT has reversed its decision.
Sue Metcalfe, deputy chief executive of the PCT, said this week: "The strategic health authority are willing to offer the PCT some bridging support to manage through this difficult time, which will lessen the impact on the voluntary sector. This has enabled us to revisit our decision on funding in this area.
"This means that the 18 organisations that were affected will now receive their agreed annual funding from NHS North Yorkshire and York up to the end of March 2011."
Angela Harrison, chief executive of York CVS, one of the organisations affected, was delighted with the news.
"We are pleased that the PCT is meeting with us as a matter of urgency to discuss funding arrangements for the next financial year as it is crucial that local charities can plan their work and staffing arrangements for 2011/12," she said.
Kate Tayler, chief executive of the North Yorkshire Forum for Voluntary Organisations, which along with York CVS had co-ordinated opposition to the cuts, said certainty over funding was crucial if charities were to deliver the big society.
Julian Sturdy, the Conservative MP for York Outer, which hosted the Westminster Hall debate, said: "I am delighted that the PCT has re-considered its original funding schedules and provided our voluntary sector with at least a few months' respite."