The £500,000 was awarded to help Mermaids create a network of groups across the country, but in December the grant was paused amid a public and media backlash.
An article in the Sunday Times criticised the charity's stance on treatment for gender dysphoria, a condition where people are born into a body with the wrong gender.
The piece claimed that parents are being pressured to support life-changing medical procedures for their children and doctors are being bullied.
TV writer Graham Linehan has also voiced concerns around the grant and posted a thread on Mumsnet, that has since been deleted, urging people to write to fund if they have concerns about the organisation and the funding award.
A 40-page report published today by the National Lottery Community Fund, said the fund had received "over 800 representations expressing both concern and support for the organisation as well as broader reflections on the best ways to support young people with gender dysphoria".
After meeting with Mermaids to go over the concerns, as well as consulting with NHS leaders in the field, the fund upheld its decision to award the grant, to be paid over five years.
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