Staff at Morrison's stores across Cornwall will be able to wear poppies, badges and wristbands in support of charities.
The supermarket chain was forced to make an announcement following a furore over the suspension of staff member Adam Austin.
Mr Austin was suspended from the Portsmouth store for wearing a Help for Heroes wristband and poppy badge in tribute to Lee Rigby, the soldier hacked to death in Woolwich.
Following a massive media backlash Morrisons has now said Mr Austin would be able to come back to work and "wear his poppy with pride".
Morrisons chief executive Dalton Philips issued a statement apologising for the way his company handled the situation.
Mr Philips said: "Quite simply we got the balance wrong."
The chief executive said badges and bands were banned for food safety reasons and from now on the ban would only apply to staff preparing food.
He said: "Colleagues not preparing fresh food will now be able to wear a pin badge or bracelet to show their support for registered charities like Help for Heroes. So Adam can return to work and wear his poppy with pride.
"It's really important to me that we show our support for our armed forces. They do really hard work on our behalf. They put their lives on the line every day. Drummer Lee Rigby's murder was abhorrent. I share your outrage at the death of this fine soldier."
