Paediatrician David Southall, who accused solicitor Sally Clark's husband of murdering their sons, will not be struck off, the High Court has ruled.
Professor Southall arriving at the High Court
The GMC had found him guilty of serious professional misconduct last year.
A judge said on Thursday that the GMC's decision to restrict his work, instead of striking him off the medical register, was not unduly lenient.
The Council for Healthcare Regulatory Excellence had challenged the GMC's actions.
In his ruling, Mr Justice Collins said: "I do not think that to impose conditions on Professor Southall's registration was unduly lenient.
"Erasure [being struck off the medical register] was not required", he added.
The GMC had ruled that Professor Southall, who is employed at the University Hospital of North Staffordshire in Stoke, should have no involvement in child protection issues for three years.
In his High Court ruling, Mr Justice Collins imposed stricter conditions on the paediatrician.
He said Professor Southall should pass on any case where he thinks a child may be being abused to another doctor, that he should make a note of such cases and that he should report to the GMC every six months.
Stephen Clark said in a statement: "While I am, of course, disappointed that Professor Southall has not been removed from the register, this decision means that seven other families' complaints to the GMC of serious professional misconduct by Professor Southall can now be heard.
He added: "My sole aim in bringing my own complaint was to ensure that Professor Southall could never again bring false allegations against innocent parents."
Sally Clark, from Wilmslow, Cheshire, was convicted in 1999 of murdering her two sons Christopher and Harry.
But that conviction was quashed when new medical evidence showing the babies died of natural causes was accepted at a second appeal hearing in January 2003.
The GMC hearing centred around conclusions Professor Southall drew after seeing an interview with Stephen Clark on Channel 4's Dispatches programme broadcast in April 2000.
In his interview, Mr Clark described how the couple's first baby, Christopher, had suffered a nosebleed just 10 days before he died in December 1996.
Professor Southall told police he believed Mr Clark had killed the children after watching the interview, but without seeing any documents relating to the case or interviewing the family.
He later outlined his concerns in a report to the family court which was considering who should take care of the Clark's third child.
The Clark family has repeatedly called for the doctor to be removed from the register.
Professor Southall told the BBC News website: "I'm very pleased to be able to continue to treat sick and injured children as a doctor."
A spokesman for the Council for Healthcare Regulatory Excellence said: "The judge agreed that the conditions imposed on Professor Southall were unduly lenient.
"We believe that the extra conditions the judge has imposed, and the review of the situation which will take place at the end of the three year period, will protect the public adequately.
The GMC said it was pleased that the High Court had backed its original conclusions.
Professor Sir Alan Craft, president of the Royal College of Paediatrics and Child Health, said Professor Southall had produced absolutely "ground-breaking research" which had shed new light on child abuse.
"He's made an invaluable contribution to protecting children. I believe that many, quite literally, owe their lives to him."
He said removing Professor Southall from the register would have been "wholly disproportionate".
And he added: "I hope and trust that today's decision will reassure paediatricians that they should not feel deterred from taking action when they believe children need to be protected."