Opponents believed that imposing discretionary local conditions would breach provisions in the 2003 Licensing Act which state premises should be judged on a case-by-case basis.
A replacement amendment will allow licensing authorities to be an interested party in a licensing application or review, but only to intervene on matters concerning individual premises.
Association of Convenience Stores chief executive James Lowman said: "This is something we have campaigned for, as we felt placing conditions on a group of premises went against the case-by-case approach of the Licensing Act. It is essential that any conditions placed on an individual licence are an effective response to specific problems linked to that premises anything else is unjustified restriction on trade."
However, he remained cautious about the new amendment. "It will mean that local authorities will act as objector as well as judge and jury, giving rise to significant questions about fairness," he said.