The Legal Services Commission has been told to reconsider its decision to refuse legal aid to the controversial cleric, Abu Hamza al-Masri.
Abu Hamza previously worked as a Soho nightclub bouncer
The commission said a funding review committee of independent lawyers had asked it to "re-evaluate" its refusal.
The cost of lawyers for the former imam of London's Finsbury Park Mosque, who is appealing against deportation, could run into tens of thousands of pounds.
The appeal, at the Special Immigration Appeals Commission, begins on Monday.
A spokeswoman for the Legal Services Commission said: "The situation is that we initially did not want to grant Abu Hamza any legal aid, and then that was appealed.
"It went to the funding review committee, and they asked us to re-evaluate our decision.
"We decided that we would provide Abu Hamza with legal aid if he could be granted a special licence by the Treasury. "
She said it was up to Mr Abu Hamza to apply for such a licence.
Egyptian-born Mr Abu Hamza has been resident in the UK since 1979, gaining British citizenship in 1981.
He was a regular preacher at the Finsbury Park mosque until his suspension by the Charity Commission last year saw him take his sermons to the road outside the mosque.
The former Soho bouncer is known for his praise of Osama Bin Laden and condemnation of Britain, the US and Israel.
Home Secretary David Blunkett withdrew Mr Abu Hamza's British citizenship in April 2003 under the Nationality, Immigration and Asylum Act 2002.
The act allows British nationality to be removed from people with dual citizenship who are believed to have acted against the vital interests of the UK.