President Donald Trump has rescinded an executive order targeting a prestigious international law firm after it promised to abandon diversity policies and provide $40m (£31m) worth of free legal work to support White House initiatives.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is a multinational law firm headquartered in New York that has many high-profile clients.

Trump’s 14 March executive order had terminated federal contracts with the firm and suspended security clearances for its lawyers, saying it was undermining the US judicial system.

Trump has issued similar executive orders against the law firms Perkins Coie and Covington & Burling.

The White House rescinded the order on Thursday after a meeting between Trump and Brad Karp, the chairman of Paul, Weiss, Rifkind, Garrison & Wharton.

In a post on Truth Social, the president said the firm had agreed to a series of concessions, including the promise to provide “the equivalent of $40 million in pro bono legal services over the course of President Trump’s term to support the Administration’s initiatives”.

It added that Paul Weiss would commit to “merit-based” hiring and promotion, and “will not adopt, use, or pursue any DEI policies”.

Trump’s order last week had cancelled contracts with the firms citing Trump’s orders to wipe out any initiatives aimed at Diversity, Equity and Inclusion (DEI) within the federal government.

The Truth Social post also included a statement from Mr Karp, who said: “We are gratified that the President has agreed to withdraw the Executive Order concerning Paul, Weiss. We look forward to an engaged and constructive relationship with the President and his Administration.”

The firm brought in more than $2bn in annual revenues in 2023, and employed more than 1,000 attorneys, according to American Lawyer Magazine. Revoking its security clearance, which allows its lawyers to see some sensitive information, could have created hurdles to its work with its many corporate, security and Wall Street clients.

In the original executive order, Trump had accused the firm of playing “an outsized role in undermining the judicial process and in the destruction of bedrock American principles”.

It had cited “a Paul Weiss partner” who had filed a pro bono lawsuit against the perpetrators of the 6 January 2021 riots at the Capitol. Trump has released all and pardoned many of those known as “J6ers”.

It also took direct aim at Mark Pomerantz – a former partner who had worked with the Manhattan District Attorney on the case involving hush-money payments to adult-film actress Stormy Daniels. Trump was convicted by a jury last year of having committed a felony in the case.

The order had also alleged that the firm “discriminates against its own employees on the basis of race and other categories prohibited by civil rights laws”.

Law firm Perkins Coie has sued in court over the similar order.