The government back down was immediately hailed by the sector as a major step in offering more stability to nurseries and contractors who could now plan ahead with more certainty.
Woodland Trust and other groups in the forestry sector created a petition signed by 30,000 supporters in a bid to free up money to support woodland planting in 2015 and beyond.
This scheme forms part of England’s new Rural Development Plan, which was signed off by the European Union last week.
The last such plan for England ended in 2013 and no new grants were approved in 2014. In 2013 a two-year gap was proposed, which the campaigners argued would have been disastrous.
"Without the trust’s intervention, this situation could have been much worse, especially as average annual planting rates have barely reached 3,000 hectares in the last 10 years, said the trust's woodland creation director John Tucker.
"More must be done to ensure the 5,000 hectare per year target, set out in the government’s 2013 forestry policy for England, is reached.
"That a funding gap of two years was even considered is unbelievable, and so we are delighted to have narrowed that gap.
"These grants are crucial and very welcome but they will still only support around half of what’s needed.
"It’s vital now that better incentives and new funding sources to encourage investment in woodland planting are prioritised.
"We hope the new grants will be the start of a period of stability for landowners, nurseries and contractors, enabling them to undertake the long-term planning that new woodland requires."
Annual planting rates have dropped alarmingly in recent years, according to figures; from 5,300ha in 2005 to 2,300 in 2010 and rising to 3,300 last year.