Leading paediatrician Professor David Southall was found guilty of serious professional misconduct after accusing solicitor Sally Clark's husband of murdering their children.
Professor Southall pioneered the use of covert filming to detect child abuse
The General Medical Council said the doctor could continue to practise, but that he could not work in child protection.
Its decision not to remove the paediatrician from the medical register was challenged by the Council for Healthcare Regulatory Excellence, which oversees the work of regulatory bodies such as the GMC.
But a High Court judge ruled that, while Professor Southall should not be struck off, the restrictions on his work should be tightened.
Professor Southall provokes strong reactions.
Some - like Steve and Sally Clark - believe he should be removed from the medical register.
During the GMC hearing, Richard Tyson, counsel for Mr Clark said Professor Southall was an arrogant, dogmatic and "very dangerous doctor" who did not deserve his place in the medical profession.
But many child health experts laud him for his pioneering research into Munchausen's syndrome by proxy, in which adults induce or fabricate illnesses in their children.
He is also credited with important research into cot death, which over-turned findings that the problem was due to the gaps in babies' breathing while they sleep.
The GMC hearing also heard testimonials from 85 people including surgeons, nurses, social workers and a judge, who praised Professor Southall's work, and who said they believed he should be able to continue working.
David Hall, professor of community paediatrics at the University of Sheffield, said: "He is a pioneer, a man who pushed the limits and went where others would fear to tread.
"David Southall is totally committed. We need people like him who challenge received wisdom, test new ideas and suggest new approaches."
'A doctor's duty'
And the hospital which employs the paediatrician, the University Hospital of North Staffordshire in Stoke, also supported him.
It said it would continue to employ Professor Southall because of his expertise in treating sick children.
His decision to air his concerns - though not the method by which he did it - has also been supported.
Dr Evan Harris, Liberal Democrat MP for Oxford West and Abingdon and a member of the science and technology select committee, said: "Doctors have a duty to report to the appropriate authorities legitimate concerns they may have about the health and welfare of children.
"What has been lost in the coverage of this case is that the doctor concerned has been criticised for the nature and style of his reporting to the child protection authorities and not the fact that he did it."
Professor Southall pioneered the use of covert video surveillance to detect cases of Munchausen's.
The eight-year study, which started in 1986, found that youngsters aged between two months and 44 months were being deliberately injured in cruel and sadistic attacks by their parents or step parents while in hospital.
The most common method of abuse was suffocation, but deliberate fractures and poisoning were also uncovered by CVS.
Following detection of the abuse, 23 parents or step-parents of the 39 children identified as at risk by doctors, social workers and psychiatrists, were found to be suffering from the attention-seeking disorder Munchausen's.
But despite Professor Southall, himself a father of four, being praised by a judge following a successful court action against one abusive mother, his efforts raised difficult ethical issues and sparked an angry response from parents.
Some parents complained that the hospitals involved - the Royal Brompton, in London, and the North Staffordshire Royal Infirmary, Stoke-on-Trent - were operating a policy of entrapment.
Covert filming led to a total of 33 parents or step-parents being prosecuted.
Seven complaints, believed to relate to cases where children were removed from families after Professor Southall diagnosed Munchausen's, are due to be heard by the GMC in January.
His research into CNEP ventilators at North Staffordshire has also provoked intense scrutiny because parents claimed they did not give consent to their children taking part in the trial and they claim their signatures were forged.