Minister for Education Ruairí Quinn has agreed to retain 235 so called “legacy” posts under the Deis (Delivering Equality of Opportunity in Schools) programme.
The U-turn came after intense pressure from disadvantaged communities and expressions of unease from a number of Government TDs. The posts were due to be abolished as part of cuts implemented in the 2012 Budget.
The Department of Education said primary school capitation funding, which is used to covers the costs of utilities like heating and electricity, would be reduced by 3.5 per cent rather than the expected 2 per cent in 2012 to cover the cost of retaining the posts.
"This rate was reduced to €183 per capita and will now be reduced to €178 applicable to all payments from January 2012," the department said.
Speaking on Newstalk's The Right Hook, Mr Quinn said: "I made a mistake. I got it wrong. When the full impact of what we did was brought to my attention I realized that we hadn't acted on the full information that we had and we hadn't analysed the full information available to us."
The Department of Education said the withdrawal of 192 posts from primary and second level schools outside required bands would proceed.
The move has drawn a mixed reaction.
Seán Cottrell, director of the Irish Primary Principals' Network (IPPN) which represents 3,350 primary school leaders, rejected the review and said it was an attempt to rob Peter to pay Paul.
"The Government's so-called concessions on restoring posts for some Deis schools are to be off-set by a further cut in cash income for schools, leaving many of them unable to pay for basic utilities such as heating and lighting," he said.
Sheila Nunan, general secretary of the INTO, welcomed the move and said most of their concerns have been met.
"The decision to cut these in the budget was misguided and needed to be reworked. We acknowledge that the minister has now reversed the severe cuts," she said.
Peter McCabe, who is principal at St Columbanus National School in Loughlinstown, said the news was very welcome.
"The minister has clearly had a rethink and realised that with Deis schools, it's not a case of just throwing money away, it's throwing money in the right direction and giving kids a chance," said Mr McCabe.
"The whole inequality between Deis schools and other primary schools is much deeper than people realise."