Justice minister Chris Grayling has dropped plans to hand legal aid contracts to the lowest bidder.
The Tories hoped the plans would help them slash up to £300 million from the annual legal aid budget.
Lawyer Matt Foot said the U-turn was “a great achievement” for campaigners.
But the Tories still want to make legal aid unavailable to migrants who have lived in Britain for under a year.
And legal aid will still be cut for judicial review, while prisoners will no longer be eligible to receive legal aid for complaints.
Daniel Guedalla, a prison law solicitor, said, “People try to trivialise legal aid for prisoners.
“But it’s about getting mother and baby units in women’s prisons and help for prisoners who don’t speak English as a first language.”
As Matt said, “We have won a major victory. But a massive fight remains to make sure everyone has access to justice.”