Prime Minister Scott Morrison has intervened to boost the government's food relief budget to ensure a charity that feeds 710,000 people a month retains its funding.
Foodbank was facing the prospect of cutting services for the needy after it was told about a redistribution of the relief budget which amounted to a funding cut of more than $250,000 a year.
"I have listened and decided to increase the Food Relief budget by $1.5 million over the next 4.5 years," Mr Morrison announced on Twitter on Tuesday.
"This maintains Foodbank's funding at $750K/yr, with Second Bite and OzHarvest funded as announced last week."
The decision means the total food relief budget will rise to $6 million.
Mr Morrison has also asked Social Services Minister Paul Fletcher to place more focus on delivering food relief in drought-affected areas.
"Important that food relief in drought areas is delivered in a way that does not undercut local businesses. Minister will work with providers to get the right plan in place," he said.
Mr Fletcher has invited the heads of Foodbank, Second Bite and OzHarvest to a roundtable to discuss the new arrangements and "coordinate a continuing collaborative approach to food relief".
Foodbank on Monday warned its Key Staples program - which makes sure essential supplies like rice, bread and vegetables get to needy people - would be at risk with its federal government funds cut from $750,000 to $427,000 a year.
The program involves food manufacturers producing food using spare production capacity and suppliers donating or subsidising ingredients, packaging and deliveries.
"We are dumbfounded," Foodbank chief executive Brianna Casey said of the initial cut, just weeks before Christmas.
Foodbank provides 67 million meals a year to charities across the country, and is Australia's largest food provider to schools for breakfast programs.
Australian Associated Press