"We wanted to make sure that they had enough flexibility in all circumstances to make a recommendation where drugs have the ability to give people some additional life."
Sunitinib, known commercially as Sutent, was originally rejected last year for the treatment of advanced kidney cancer along with three other drugs.
Final advice on the use of these three drugs - as well as sunitinib - will be issued in March.
The National Institute for Health and Clinical Excellence said it took into account the offer of the manufacturer, Pfizer, to provide the first cycle of sunitinib free to the NHS when making its decision.
The average daily cost of sunitinib is about £75, with an average six-week cycle costing in excess of £3,000.
Early last month, NICE agreed to extend the threshold at which drugs for terminally ill patients are deemed cost-effective.
Last year renal cancer experts criticised draft proposals to deny four treatments to patients with advanced kidney cancer, because they only extended life by a matter of months.
NICE said that while Avastin (bevacizumab), Nexavar (sorafenib), Sutent (sunitinib) and Torisel (temsirolimus) provided "significant gains" in survival, they did not meet cost effectiveness criteria.
But doctors said it left them with few options to treat the 1,700 people diagnosed every year with the advanced form of the disease.
The approval of sunitinib has been welcomed by doctors, although they stress there are some patients who are not suited to the drug and would do better on one of the other three.
"It's not for everyone, and particularly those with cardiovascular problems," said Professor Tim Eisen, a kidney cancer specialist at the University of Cambridge.
"But this is a very welcome step."
Rachel Rowson, policy manager at Macmillan Cancer Support, said: "This is a victory for kidney cancer patients and is long overdue.
"This decision recognises the need to fund drugs that improve quality of life for patients and we applaud Nice for making Sutent available to all who need it.
"Macmillan will continue to campaign to ensure the other three drugs for kidney cancer are also approved for use on the NHS."
Professor Peter Johnson, of Cancer Research UK, said sunitinib could "make an important difference" for people who have few other options for treatment.
But he called on NICE to decide on the remaining three drugs as quickly as possible - and ensure one or more was made available to patients.
Earlier this month, the Welsh health minister Edwina Hart announced that all four kidney cancer drugs would be made available to people in Wales.
However, this decision may be reviewed when NICE announces its final decision on all four drugs.
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