The government has decided not to shelve the ContactPoint database immediately, saying instead that its operations will be scaled down gradually.
ContactPoint was designed to improve child protection by increasing the amount of information shared between government departments. It holds information on all children under the age of 18.
However, it can be accessed by at least 330,000 people, and has been heavily criticised for reasons of privacy and security.
Scrapping the database was a key pledge in the Conservative manifesto and, along with abolishing ID cards and relaxing rules on the retention of DNA records, formed a major part of the coalition's civil liberties agenda.
But in a letter to directors of children's services, Tom Jeffrey, director general of the Department for Education, recognised the "significant investment" that had already been made in developing the database and its supporting infrastructure.
"In considering a new approach, the government will seek to make the most appropriate use of that investment wherever practicable," he wrote.
"As an interim measure, ministers have decided to maintain ContactPoint in limited operation pending firmer decisions on what should come after it."
Jeffrey went on to explain that, in the longer term, access to the system and the eventual removal of data will be managed centrally.
"We will provide further information to local authorities and other partners in due course about the impact, timings and effects of closing down the system, " he said.
"In the meantime, please ensure that you continue to treat any information which you have stored in line with the requirements of the Data Protection Act. "
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