BBC Radio 1 has said it will allow the Pogues' Fairytale of New York to be played on the station uncut, after criticism of a decision to censor it.
The words "slut" and "faggot" had been dubbed out from the 20-year-old festive hit by station executives.
But after a day of criticism from listeners, the band, and the mother of singer Kirsty MacColl, they changed their minds.
Controller Andy Parfitt said the original decision was "wrong".
The BBC had said that an edited version would be played because "some members of the audience might find it offensive".
But sister station Radio 2 said it would play the track uncut, and Mr Parfitt subsequently said that after "careful consideration", the ban on the uncut version of the song would be lifted.
"Radio 1 does not play homophobic lyrics or condone bullying of any kind," he said.
Kirsty MacColl died 13 years after the track's release
"It is not always easy to get this right, mindful of our responsibility to our young audience. The unedited version will be played from now on.
"While we would never condone prejudice of any kind, we know our audiences are smart enough to distinguish between maliciousness and creative freedom. In the context of this song, I do not feel that there is any negative intent behind the use of the words, hence the reversal of the decision."
He told BBC News 24 the decision to edit the song had been made "some months ago" as part of a review of older records played on the station.
MacColl, who was killed by a speedboat off the coast of Mexico in 2000, brands Pogues frontman Shane MacGowan "you scumbag, you maggot, you cheap lousy faggot" in the song, which reached number two when it was first released.
She continues: "Happy Christmas your arse, I pray God it's our last."
Another line, where MacGowan calls MacColl "an old slut on junk", was also edited.
'These are characters'
Jean MacColl told BBC Radio 5 Live's Breakfast: "These are a couple of characters - not in the first flush of youth, I would have thought.
"This is the way they spoke. Today we have a lot of a gratuitous vulgarity and whatever from people all over which I think is quite unnecessary.
"They are what they are. These are characters and they speak like that."
A spokesman for the Pogues, who first formed in 1982 and reunited in 2001 after a five-year break, said they "found it amusing that a song that has been one of the best-loved Christmas tunes should suddenly have been deemed offensive".
Radio 1 listeners also criticised the ban on Newsbeat's website.
However, veteran gay rights activist Peter Tatchell said Radio 1's original actions were right.
"The word faggot is being sung as an insult, alongside scumbag and maggot. In this abusive context it is unacceptable," he said.