After rejecting proposals that could have seen funding withdrawn, Defra said that it would maintain its investment of £2.3m in the ACRE Network for 2015/16.
The decision came after more than 13,000 people signed a petition calling for funding to be maintained.
At the height of the campaign, the petition was being signed by more than 1,000 people every day.
The e-petition was started by the charity Action With Communities in Rural England (ACRE), which acts as the umbrella organisation for 38 community councils across England.
The network of rural community councils carries out crucial work to help our communities thrive, said the petition.
Speaking after Defra confirmed that funding would continue, ACRE chief executive Janice Banks said: "This is good news for ACRE and its nationwide Network of rural community councils.
"We would like to thank everyone who showed their support for rural communities and the work we do."
Community councils tackle a range of issues – from the lack of affordable homes, broadband or public transport to supporting the young, the elderly and vulnerable rural residents
The ACRE Network also provides advice to the 80,000 volunteers who keep England’s 10,000 village halls alive.
Without the network's support, ACRE said rural communities would be less resilient, services would be lost and more people would become lonely and isolated.