Action for Prisoners' Families will receive 180,000 over three years towards core costs. The grant was frozen by the fund in the light of its legal dispute with the Franklin Mint.
Lucy Gampell, director of Action for Prisoners' Families, said she was delighted the dispute was over. "This funding will enable us to continue to champion the needs of prisoners' families," she added.
The fund hopes to announce more grants, including cash to improve services for bereaved young people, by the New Year. It has announced it will be opening a competitive grants round for UK and international work in 2005.
Chief executive Andrew Purkis told Children Now funding guidelines were likely to be announced early next year.
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