The UK government has released £50 million ($98m) to the World Bank after it resolved a dispute over conditions attached to aid for poor countries.
The UK government said conditions hurt the poorest
The aid had been withheld because the UK opposed the number of conditions imposed on developing countries - a figure which has now dropped.
International Development Secretary Hilary Benn said a report from the bank showed it had made "real progress"
He asked for an update in 12 months, which the bank president had agreed to.
According to the Department for International Development, the report, which it has been considering since it was issued in November, showed that the number of conditions used by the bank has fallen during the past year.
It also said the World Bank was moving away from using conditions to impose economic policy choices on governments.
The bank has also "made real efforts to make sure that the conditions it does use reflect the priorities of developing countries".
In September, the UK government had said it wanted to see significant progress made on enacting reforms to aid conditions agreed in 2005.
Key areas included removing the requirement on countries to liberalise their economies and to privatise key industries.
"Until now, I had not seen the evidence to show that the bank had made enough progress in implementing these changes.
"But having now considered the report, received last month, it does show real progress, and that is why I have decided to release the £50 million," Mr Benn said.
"But - as the report recognises - the bank needs to go further in ensuring that its conditions do not impose specific economic policies on poor countries, and that's why I've asked for a further report on progress in 12 month's time."
The £50m was part of the UK's £1.43 billion contribution to the World Bank's International Development Association (IDA), which gives loans and grants to the world's poorest countries.
Every three years the donors meet to agree how much they will provide to the IDA.
Mr Benn said further progress would be central to the next round of negotiations with the IDA in 2007.