Liverpool will face Atletico Madrid in the Vincente Calderon stadium next week after UEFA temporarily reversed their decision to force the Spanish side to play away from their home ground.
UEFA had placed a two-match ban on Atletico earlier this week, a decision which incensed Liverpool fans after they had made plans to travel to Madrid. Under the suspension, Atletico would have had to play at least 200 miles outside Madrid, causing chaos for supporters.
Liverpool chief executive Rick Parry immediately expressed his satisfaction, saying: "We're delighted at the decision because it means our fans can travel to the game as previously planned without additional expense or inconvenience.
"Liverpool are grateful for the help the FA have provided and pleased UEFA have listened to and acted on the arguments we put forward this week.''
The punishment was meted out after crowd trouble and racist abuse marred their Champions League clash with Olympique Marseille at the beginning of the month.
Atletico appealed the decision but it has only been temporarily lifted by European football's governing body pending a hearing.
A UEFA statement read: "Following the decision of UEFA's Control and Disciplinary Body to sanction Club Atletico de Madrid for a series of incidents at the UEFA Champions League Group D match against Olympique de Marseille on 1 October, the club has lodged an appeal against the decision and requested suspension of the sanctions to allow their match against Liverpool FC to be played in Madrid as originally scheduled.
"After immediate consideration of the request for suspension, and having considered in particular the organisational and logistical difficulties related to relocating the Club Atletico de Madrid v Liverpool FC match to another venue at short notice, the chairman of the appeals body has decided to grant the request for suspension of the sanctions.
"Consequently, UEFA can confirm that the UEFA Champions League match between Club Atletico de Madrid and Liverpool FC will take place as scheduled on October 22 at the Vicente Calderon Stadium in Madrid.
"It should be emphasised that suspension of the sanctions does not mean that the decision of the control and disciplinary body has been set aside. The decision remains in force pending a full hearing of the appeal which will take place on Friday, October 31 at the UEFA Headquarters in Nyon, Switzerland.
"UEFA is however keen to stress that safety and security matters, including efficient cooperation with the police, are of the utmost priority and that there is a zero-tolerance policy for incidents concerning racism in football.
"The match between Club Atletico de Madrid and Liverpool FC will be under particular scrutiny and UEFA is ready to take immediate and further action if there are any reported incidents at this match.''
Atletico responded on Thursday night by welcoming UEFA's decision and asking fans to respect their opponents next week.
"Club Atletico de Madrid, after receiving the official notification of the provisional suspension granted by the UEFA Board of Appeals requested by the Club, would like to state their approval with the decision adopted by this body, by virtue of which the Champions League match between Atletico de Madrid and Liverpool will be played at Estadio Vicente Calderon and their manager, Javier Aguirre, will be able to sit on the bench.
"Regardless of the provisional suspension conceded, the Club will continue to fight the charges with the goal of completely clearing up everything that occurred and proving their innocence, along with proving the absence of the organisation's responsibility with respect to what they have been accused of.
"Furthermore, the club would like to ask its fans to show the maximum respect towards the decision adopted by UEFA and to continue to display the good sportsmanship and fair play that they have been demonstrating at all matches to date, considering the importance lent to supporters' behavior for the positive development of a football match."
The punishment could be extended to a third home match should there be further trouble. They were also fined 150,000 euros and Aguirre was banned from carrying out his functions for their next two Champions League fixtures in Group D.