Earlier this year, humanists Lee and Lizanne Harris claimed their children's human rights were being breached when they were put in a classroom at Burford Primary with just an iPad and a teaching assistant while other pupils sat through collective worship.
They previously withdrew their children after claiming they'd noticed harmful aspects of evangelism spreading into assemblies and other parts of the school.
They took legal action claiming better provision should be given to their children with the High Court being asked to intervene.
The Oxford Diocesan Schools Trust has now settled the case out of court.
Humanists UK said the decision marks a significant win against Christian worship in schools but in a statement to Premier the Oxfordshire Diocesan Schools Trust said it was simply a "pragmatic decision to avoid wholly unnecessary court costs".
The concessions made by the school include:
- Age-appropriate materials for spiritual, moral, social and cultural development being made available to children who've been withdrawn from assemblies
- No clergy to lead school events other than collective worship
- Not permitting the local church to provide free Bibles for school leavers (something which stopped last year)
Lee and Lizanne Harris said: "We are delighted that the school has backed down and agreed to provide our children with an alternative, inclusive assembly of equal educational worth.
"Ultimately, we took this case to ensure our children receive an inclusive education without the indoctrination of one enforced religion.
"We believe this isn't just the right of our children, but all children. The defendant's reluctance to take this to court, in our view shows the growing fragility of this outdated law and those who choose to enforce it.
Anne Dellar, CEO Oxford Diocesan Schools Trust (ODST) has responded to claims by Humanists UK that this was a "shock climb-down".
She said: "A small community school has been placed at the sharp end of a national campaign.
"At a time when school funds are stretched ODST took the pragmatic decision to avoid wholly unnecessary court costs.
"A short term child-specific arrangement has been agreed between ODST and the parents of two children attending Burford Primary School. The arrangement will lapse when the youngest of the two children leaves the school.
"Burford Primary School is not offering an alternative assembly; rather, a small number of children who are withdrawn from collective worship will be able to access alternative materials, overseen by a teacher."
Upon hearing the decision, Rt Rev Dr Steven Croft, Bishop of Oxford, has defended the role of the Church within schools.
He said: "From reading with children to organising assemblies and talks, input from the local community and volunteers enhances the life of every school, including community schools.
"Members of local churches play a valuable role in communities across the country.
"The Church of England has always worked to enable the best education for all children, motivated by our deep Christian values and recognising the changing, diverse society we serve. We will continue to do so."
As part of the agreement the ODST must now pay two-thirds of Lee and Lizanne Harris' legal costs, limited to £40,000.
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