Luol Deng is set for his GB debut this summer

The funding, worth �325,000, was due to have been paid to EB last September.

World governing body Fiba accused SE of political interference in the sport over the funding issue and said it would ban English players on 15 June.

The climb-down by SE fulfils one of the criteria set out by Fiba in order for the ban to be lifted.

The Fiba ban will remain, however, if Sport England fails to certify England Basketball as being 'fit for purpose' in the next two weeks.

The money had been withheld because a government-funded review had been critical of England Basketball.

"The money is being released on the understanding that EB will step up to the challenge to take the sport to the next level," said SE chief executive Jennie Price.

"We will be looking for a substantial programme of reforms along the lines proposed by the Mallin Review."

The review, due to be published in July, has called for radical changes in EB's constitution in a bid to double the number of basketball players in England.

Fiba's ban, announced two weeks ago, means that English players like NBA star Luol Deng would be unable to play for Great Britain in this summer's European qualifying games.

Fiba are unlikely to allow Britain to participate as hosts in the 2012 Olympic tournament if the newly-unified team fails to qualify for the 2009 or 2011 European finals.