A political row had broken out when the authorities issued an unprecedented ban on Thursday’s march, sparking outrage from trade unionists and criticisms on the left of the Socialist party.

Philippe Martinez of the hardline, leftwing CGT union told a news conference: “After tough talks with the interior minister, the union and student organisations obtained the right to demonstrate on a route proposed by the interior ministry.”

Earlier, Paris police had said they had “no other choice” but to forbid the street protest planned for Thursday after last week’s march in the capital against the proposed loosening of France’s rigid labour protections culminated in hundreds of masked protesters in running street battles with police. Forty people were hurt and dozens arrested.

But on Wednesday, the government held urgent talks with union leaders amid fears that people would take to the capital’s streets despite the ban.

In France, people’s ability to stage protest rallies and express their political views on the street is seen as a key right.

If the ban had gone ahead, it would have been the first time a French government banned a trade union-led demonstration in Paris since the violent backdrop of the Algerian war in 1962, when leftwing unions sought to demonstrate for peace in the north African country and nine trade unionists were killed by police at Charonne metro station.

The government had previously held 24 hours of negotiations to discuss how to control Thursday’s march. The Paris authorities first asked the organisers to hold a stationary rally instead of a march through the capital. The CGT union, which is leading the protests against Hollande’s proposed labour reforms, refused. Paris police then announced they would simply forbid any protest. After talks with union leaders on Wednesday, the government staged a U-turn and said the march could go ahead on a restricted 1.6km route near Paris’s Arsenal.

Thursday’s street demonstration will be the 10^th since protests began in March against Hollande’s proposals to relax France’s rigid labour code, which, the government argues, is crucial to lower unemployment, but protesters say is bad for workers’ rights and too pro-business.

The rebel Socialist MP Christian Paul, who heads a group of leftwing parliamentary Socialists opposing their own government’s labour proposals, said the ban would have been a “historic mistake”.

The reformist CFDT union, which supports the government’s proposed labour laws, had warned that although it disagreed with the reason for the protest marches it defended “the right to demonstrate”.

Benoît Hamon, a former Socialist minister and leading critic of Hollande, said banning the demonstration would have been “useless political provocation”.

The former rightwing president Nicolas Sarkozy had earlier called a ban “unreasonable”. But others on the right, such as the former prime minister François Fillon supported a ban “for security reasons”.

The row comes as France’s security services are under severe pressure, with the Euro 2016 football tournament taking place amid a high terrorism alert and hooligan disturbances, an increased riot police presence in Calais around refugees and migrants as well as regular nationwide demonstrations against labour reforms.

Angelique Chrisafis in Paris