Work programme provider G4S is to have its ban on applying for new government contracts ended - after just one year.
The company was pulled up after it was found to have overcharged the state by £109 million for the electronic tagging and monitoring of prisoners.
But the Cabinet Office has backtracked on this ban, saying G4S had taken "positive steps" to change its practices and engaged "constructively" with the government.
This is despite the fact that the Serious Fraud Office (SFO) is still investigating the company over the security tagging issue, and criminal charges could follow.
The SFO has identified other contracts that saw overcharging, with two relating to facilities management seeing a £4.5 million repayment.
G4S was contracted to provide security for the 2012 London Olympics, but after recruiting unemployed people during the early part of 2012 it had not apparently understood that many would get work before the Olympics started.
This led to a huge shortfall in the numbers needed, and the British armed forces were called on to step into the breach.
Despite the SFO investigation and proven overcharging the company has been allowed to continue delivering its work programme contracts.
It is active in three areas, and although it gets more people into work than some other companies, none of its contracts gets jobs for more than 13% of its long-term clients.