Rule changes put forward by Indonesia's trade ministry earlier this year would have ended inspections of timber goods for export - to ensure the wood was obtained legally and not linked to deforestation - from late May.
But in a regulation enacted on May 11, the ministry said reinstating the checks would "provide certainty" for exporters.
Faith Doherty, forest team leader at the London-based Environmental Investigation Agency, said in a statement on Friday Jakarta had done "the right thing".
Relaxing the rules "would have been a disaster for the country's environment and for its international credibility", she added.
The proposed move to loosen checks had followed lobbying by an association of furniture and handicraft manufacturers, which said compliance with the rules drove up costs.
Indonesia is home to the world's third-largest tropical forests and has worked hard in recent years to stop illegal logging, including introducing a moratorium on new forest clearance to slow deforestation.
Indonesia lost 1.6 million-2.8 million hectares of forests annually before 2010, according to its forestry ministry.
Environmental groups said abandoning mandatory inspections would have ruptured a groundbreaking legal framework built over the last decade to combat deforestation in the country.
Forest activists said removing export checks could enable illegal timber to be laundered through ports.
Indonesia won international recognition in 2016 after it became the first country to issue licenses for the export of verified timber products to the European Union.
The licenses depend on Indonesia conducting due diligence on the origin of timber exported to the EU.
Concerned at the proposed change, the EU and several foreign timber associations wrote to the Indonesian government seeking confirmation it would not undermine the existing agreement.
Abu Meridian, executive director of Indonesian environmental group Kaoem Telapak, said the decision to safeguard standards "preserves this deal ... and clearly demonstrates that it should not be disregarded lightly as an economic asset in itself". - Reuters
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