Councils have been told they can continue holding prayers before meetings after one Hampshire authority vowed to join others in defying a ban.
The Government has rushed through new powers onto the statute book, days after a High Court ruling said it was unlawful for councils to incorporate prayers into proceedings.
It comes as the leader of one Hampshire authority said he would have been willing to defy the "ridiculous" ban.
Local Government secretary Eric Pickles has moved swiftly to overrule the controversial judgement.
He signed a parliamentary order that came into effect at midnight making the practice of holding prayers lawful.
It brings forward a power contained in the Government's Localism Act, which was due to come into force in April.
The ruling, by Mr Justice Ouseley, had been branded 'ridiculous' and 'anti-Christian' by some councillors, who were prepared to defy the ban before Mr Pickles intervened.
Cllr Sean Woodward, leader of Fareham Borough Council, said: “When I became the leader of Fareham Borough Council I formalised prayers on the council agenda and we have had them at the start of every full council meeting ever since. That was 13 years ago.
“But now I have been told by the council's solicitor that, if the prayers appear on the agenda for this week's meeting, I will be breaking the law and could face prosecution. That is just ridiculous. The Church of England is the established church in this country and saying prayers at the start of council meetings is a tradition that should not be changed.”
The ruling came after an atheist former councillor took Bideford Town Council in Devon to the court, with the backing of the National Secular Society.
On the new powers given to councils Mr Pickles said: “We are striking a blow for localism over central interference, for freedom to worship over intolerant secularism, for parliamentary sovereignty over judicial activism, and for longstanding British liberties over modern-day political correctness.
“Last week's case should be seen as a wake-up call. For too long, the public sector has been used to marginalise and attack faith in public life, undermining the very foundations of the British nation. But this week, the tables have turned.”