All pubs will have to apply for an entertainment licence for some kinds of live music, after the House of Lords failed to defeat the Commons over controversial proposals to review the situation.
But the trade can claim a partial victory after certain types of traditional pub music were made exempt from the plans.
The Lords failed to push through an amendment to the Licensing Bill that small venues should be exempt from requiring licences for live music.
But, the government, which was eager to avoid further delays to the Licensing Bill, agreed that casual pub entertainment attracting small audiences and causing no disturbance would be exempt. It also agreed that the effects of the legislation on entertainment licensing will be reviewed within 12 months.
"If it proves the bill has had an unintended, disproportionate, negative effect on the provision of live music, we will use powers already in the bill to modify the position through secondary legislation," Lord McIntosh of Haringey told the House.
Industry leaders welcomed the exemptions.
"What is now in the bill represents more flexibility both for pubs and musicians to carry on providing entertainment and is far better than what was in the original bill," said Mark Hastings, spokesman for the British Beer & Pub Association said. "There are more exemptions and greater opportunities for pubs."
The Lords had wanted an amendment to the Licensing Bill that would have meant events catering for fewer than 200 people would be exempt from having to apply for an entertainment licence.
But the government refused to back down, saying public safety was too important an issue.
"We are simply not prepared to put lives at risk," said Lord McIntosh.