Chancellor George Osborne has backed down on plans, announced in the Budget, to introduce a limit of £50,000 or 25% of income, whichever was higher, on the amount a person could donate instead of paying it in tax.
The measure was defended as a way of clamping down on tax avoidance but it was met by a backlash from charities who feared a significant drop in donations.
ACFA spokesman Aidan Vaughan said: "Generosity is at the heart of healthy society and should be a key principle of financial planning. ACFA applauds the Chancellor for listening and encouraging generosity in giving."
Charitable giving in the UK is very popular. According to the ACFA, six out of 10 adults gave an estimated £11 billion in 2010/11.
"Restricting charitable giving sent out the wrong message to a sector which has suffered in the recession," said Mr Vaughan.
"With the cuts in the welfare sector, giving to good causes and getting involved in charitable and community action has become even more important. A potential loss to the Treasury of £30m is small beer compared to the benefit to charitable causes."
"While there are relatively few ‘blockbuster’ gifts above £50,000, large donations can stimulate positive publicity and encourage others to offer to give, so today’s decision to open the way once again to large-scale giving is good news for the sector."