More than 200 arts venues across England face uncertain futures after receiving confirmation that their government grants have been cut.
But Arts Council England did a U-turn on proposed cuts to 17 venues, including London's Bush Theatre.
Writers including Mike Leigh had protested against the Bush proposals.
Last March, more than £100m of Arts Council England funding was cut to pay for the London 2012 Olympic Games. But it was given a £50m boost in October.
Letters were received by all of the affected arts groups on Friday telling them of the final funding decisions.
A total of 185 organisations will not have their funding renewed, while 27 will have their grants reduced.
But 81 venues that have not previously received Arts Council funding will benefit from new grants over the next three years.
Three-quarters of the 888 funded arts organisations will be given increases in line with, or above, inflation.
"We are thrilled and relieved," the Bush Theatre's artistic director Josie Rourke said. "We've had an incredible groundswell of support."
Venues that will not have their funding renewed include the Derby Playhouse, which has had its £700,000 grant withdrawn.
Its director, Jonathan Powers, said the decision left just two weeks to find private money to save the venue.
The Northcott theatre in Devon had a reprieve, with Arts Council England agreeing to fund it for another year, although its future beyond that is in doubt.
The Old Vic in Bristol was hoping for a grant of £3m, but received £2m.
Eastern Angles touring theatre and the National Student Drama Festival were among those threatened with cuts but which will now receive funding after all.
Mike Leigh had given his support to the Bush Theatre in west London
But black artists' group the Kuumba project, also based in Bristol, has had its grant withdrawn.
"This is a radical plan - as the controversy of recent weeks has shown - but one I firmly believe will help to make the arts in England even stronger," said the Arts Council's chairman, Christopher Frayling.
However, the Conservatives were critical of his organisation's funding decisions.
Jeremy Hunt, the shadow culture secretary, said withdrawing grants on such a scale would "create boom and bust in the arts economy".
"Trying to spin this as an 'ambitious vision' is simply a kick in the teeth for the organisations that will have to close down as a result of these decisions," he added.