Two coastguard centres threatened with closure have won a shock reprieve - but one previously saved from the axe will be shut.
Milford Haven and Holyhead stations will stay open but Swansea, which was to be downgraded under the plans, will close by 2015.
The news has prompted a mixed response in Wales with shadow Welsh secretary Peter Hain urging the UK Government to also do a "U-turn" on its Swansea decision.
Swansea was initially safe from closure, with its operations being limited to daylight hours only.
But campaigns to save Milford Haven and Holyhead stations saw a 20,000-name petition handed in to Downing Street.
They argued that as well as watching over the UK's third largest port, the Milford Haven centre was also responsible for the coastline from Carmarthen to Barmouth - an area usually "very busy" with tourists and leisure craft.
Today, Transport Secretary Philip Hammond said Holyhead was being favoured instead of the MCA base at Liverpool following representations over Welsh language concerns.
And he added Swansea would now closed instead of Milford Haven in Pembrokeshire - citing a higher level of Government employment in Wales' second city.
Plaid Cymru MP for Carmarthen West and Dinefwr, Jonathan Edwards, described the announcement as "bittersweet".
He said: "Milford Haven and Holyhead have fought fierce battles to be kept open and we welcome the announcement that they will remain fully operational.
"But there are now huge questions as to why exactly Swansea is to be closed? I will be asking what representations were made by ministers from the new Welsh Government on this?"
Organisers of the Save Milford Campaign expressed their delight at news the service in West Wales had been saved but described the news that Swansea was closing as "devastating".
The Welsh Government said UK ministers would have to "account for any consequences" for sea safety.
A spokesman added: "We will be seeking urgent assurances from the UK Government that they have considered all the potential risks of closing such a strategically important station."
Bob Crow, general secretary of the RMT transport union, said he still remained concerned despite the UK Government watering down its plans.
Its original proposals envisaged cutting the coastguard centres across the UK from 19 to nine, with only three remaining open 24 hours a day.
However, the revised plans will now see 11 centres stay open - all of which will be on a 24-hour basis.
Mr Crow said: "We will be seeking further assurances there will be no impact on the safety of our members out on the high seas.
"What we have proved conclusively is that campaigning pressure can and does work when it comes to resisting Government cuts.
"We will take this momentum with us into other areas where services are under attack."