Communities Secretary Eric Pickles has moved to restore the legal basis for councils to hold prayers at the start of business.
After the High Court ruled last week that local authorities could not hold prayers during meetings, Pickles said he was "effectively reversing" the judgment.
He has fast-tracked the implementation of a general power of competence - contained in last year's Localism Act - enabling councils to do anything an individual can do that is not illegal.
Pickles believes this will render the High Court ruling - which followed objections to prayers at Bideford Town Council in Devon - irrelevant.
Mr Justice Ouseley, sitting in London, ruled last week that councils lacked power under section 111 of the Local Government Act 1972 to hold prayers "as part of a formal local authority meeting".
The National Secular Society and an atheist ex-councillor had argued that Bideford council was acting unlawfully by putting prayers on meeting agendas.
The ruling was condemned by government ministers and clergy.
It is understood the ritual dates back in Bideford to the days of Queen Elizabeth I, and the council has recently voted twice to retain it.
Pickles said today: "The High Court judgment has far wider significance than just the municipal agenda of Bideford Town Council.
"By effectively reversing that illiberal ruling, we are striking a blow for localism over central interference, for freedom to worship over intolerant secularism, for Parliamentary sovereignty over judicial activism, and for long-standing British liberties over modern-day political correctness.
"Last week's case should be seen as a wake-up call. For too long, the public sector has been used to marginalise and attack faith in public life, undermining the very foundations of the British nation. But this week, the tables have been turned."
The general power of competence for councils was meant to take effect from April, but Mr Pickles signed a parliamentary order today bringing it in immediately.
The Department for Communities and Local Government said larger councils would be able to continue with prayers although smaller councils, including Bideford, would have to wait until March.
It is only available to councils in England.
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