Dartmoor pony populations will be protected at their current levels, ministers have said amid fears a livestock-counting method would lead to a cull.
Campaigners warned that requirements to cut grazing on the moor’s commons under new contracts from the Government’s conservation agency Natural England could lead to the removal of up to 90 per cent of hill ponies.
Conservative leader Kemi Badenoch labelled the situation as "total madness".
However, the Environment Department (Defra) has now said the ponies will be removed from stocking rate calculations, meaning farmers will not face a choice between keeping ponies and maintaining sheep or cattle.
Pony numbers will be monitored across the moor to make sure they remain stable.
The loss of ponies would be damaging for the biodiversity of the landscape, as they are the best grazer of the "monoculture" Molinia grass that has come to dominate the moor, according to campaigners.
Dartmoor hill ponies have been on the landscape for 4,500 years although numbers have dwindled from 6,000 25 years ago to fewer than a thousand today, owing to historical policy changes, and they have been declared an endangered breed.
Meanwhile, a pony supplement will be introduced into farming schemes to remove any financial incentive to reduce populations, Defra said.
Natural England Chief Executive Marian Spain said: "Natural England has always been clear that Dartmoor’s ponies play a central role in shaping the landscape and supporting nature, and we want to see them continue to do so.
"The Government policy changes announced today will enable us to work with farmers to secure the agreements we need to recover nature on Dartmoor.
“We will continue to work with Dartmoor Land Use Managers Group and other local groups on the new framework to ensure a healthy, sustainable future for Dartmoor."
Chairman of the Dartmoor Land Use Management Group Phil Stocker said: “This announcement gives pony keepers the reassurance they need that Dartmoor’s native pony populations are a valued and essential part of the ecology and culture of Dartmoor.
Campaigners welcomed today's announcement, saying it secured a future for the ponies in their natural habitat.
Head of Operations at the Dartmoor Pony Heritage Trust Catherine Anderson said: "We are very happy with the proposed way forward.
"The review of native breed at risk support is fantastic. This will ensure herds maintain their place on Dartmoor for generations to come.
"The payments will also create a huge incentive to farmers to retain their ponies on the common."
The Government has confirmed new pony supplement announced today will also benefit those grazing ponies on other upland areas in England, such as Exmoor and the Cumbrian Fells.
A Defra spokesman said: "If eligible, they will be able to apply for the supplement, recognising the wider role ponies play in conservation grazing across England’s landscapes.
"Today’s announcement takes forward a recommendation from the Fursdon Review, an independent review of protected site management on Dartmoor, published in 2023, which called for ponies and cattle to be treated separately when calculating livestock stocking rates under government farming schemes.
