The Turnbull government has scuttled a controversial rule change which forced poorer migrant families to earn more in order to sponsor the visas of relatives.
Migrants have applauded the scrapping of plans to dramatically raise the income requirements for people wanting to bring their relatives to Australia.
Social Services Minister Dan Tehan was forced to back down on the controversial new rules following fierce backlash from community groups.
Mary Patseos, from the Federation of Ethnic Communities' Council of Australia, said people were upset and outraged by the proposed change.
"These changes would have affected all family reunions, regardless of place of origin, with the additional costs imposing a heavy financial impact on Australian families," Ms Patseos said on Thursday.
"We are pleased that the minister has listened to FECCA and communities across Australia, and made the decision not to proceed with the proposal."
Mr Tehan made changes in early April which moved the "assurance of support" income threshold from $45,185 to $86,606 for single people or a combined $115,475-a-year for a couple.
Greens senator Nick McKim had intended to move a motion against the changes in the upper house on Wednesday and had the support of Labor and Senate crossbenchers Derryn Hinch, Tim Storer, Stirling Griff and Rex Patrick.
But as the motion drew closer, the minister contacted Senator McKim to confirm the government would return to the old arrangements, which would be retrospective to cover any applications submitted after March 31.
Mr Tehan acknowledged that had Senator McKim's motion succeeded it would have resulted in the processing of visas ceasing immediately.
"The government wanted to ensure these visas continued to be processed, so in discussions with Senator McKim reached an agreement to avoid an unwanted outcome," Mr Tehan told AAP.