Finlay, who was the chief political adviser to former Labour leader Dick Spring in the Fianna Fail/Labour coalition of the mid-1990s, had sharply criticised what he claimed would have been undemocratic restriction on charities becoming involved in political lobbying.

In March, the Broadcasting Commission of Ireland sparked widespread controversy when it ordered radio and TV stations to stop broadcasting a Trocaire ad which highlighted the unequal treatment of women in Africa.

The BCI said the ad breached the terms of the broadcasting act, which prohibits advertising "directed towards a political end".

Last month, an advertisement by the Irish Autism Action group highlighting the lack of funding for autistic children was also pulled by the BCI on the basis that it was critical of government policy.

The new bill will ease pressure on charities to steer clear of the political arena. Finlay had argued that the original plan to restrict political activity among charities was part of an emerging legal environment which would make it increasingly difficult for charities to work effectively.

Overall, the bill will demand greater transparency from charities concerning their fundraising and is designed to flush out bogus charities that are raising funds for terrorist activities.

While welcoming the u-turn on political advocacy, Finlay said he hopes that whatever government takes over on 14 June will deal with the proposed charities legislation "as a matter of priority" as it is important that charities be regulated.

The bill was one of the major casualties of the dissolution of the Dail in early May but it is likely to be taken up by the incoming government.