The University of Michigan will now allow its Asian InterVarsity Christian Fellowship chapter to stay on campus.
Last week, the university removed the chapter after the ministry refused to drop its religious qualifications for student leadership, saying they violated the school's non-discrimination policy
But now the university says it has created an exemption for religious student organizations like InterVarsity.
The pressure on college ministries to abandon faith-based leadership requirements has increased since a 2010 Supreme Court decision.
In Christian Legal Society vs. Martinez, the court ruled that a public college may enforce an "all-comers" policy on a religious group without violating the First Amendment, as long as it applies the policy to all campus groups.
Intervarsity Field Director Greg Jao said Monday he was grateful for the school's "common sense" decision.
"They join peer institutions like Tufts, Ohio State, and Minnesota in creating a truly tolerant campus environment that welcomes and supports religious groups," Jao said.
"We look forward to continuing the conversation with the university to amend the university's non-discrimination policy to formalize this exemption," he added.