The White House says it has rescinded a memo authorising a federal freeze on hundreds of billions of dollars in grants and loans, which sparked widespread panic among millions of people who rely on government aid.
It comes after a judge temporarily halted the order on Tuesday, only hours after it was signed by President Donald Trump and the memo was issued by the Office of Management and Budget (OMB).
The judge paused the order until next Monday, after a lawsuit was filed by a group of organisations representing grant recipients.
The new letter issued on Wednesday states "OMB Memorandum M-25-13 is rescinded."
It is unclear what prompted the apparent U-turn.
In a statement, White House Press Secretary Karoline Leavitt said the administration was still pursuing a freeze.
Leavitt says this is not a rescission of the federal funding freeze, it is simply a rescission of the OMB memo.
The office said the move was intended to give the new administration time to assess what grants and loans were in step with their agenda.
But the order prompted widespread confusion about which agencies and programmes would be impacted.
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