It comes after more than 5,000 people signed a petition calling for Staffordshire County Council to reverse its plan to stop funding the £1.8 million non-statutory residential care for children at five schools from September next year.
The authority has now said it will maintain the service as it reviews its wider special needs strategy.
Walton Hall Academy in Eccleshall, Saxon Hill Academy in Lichfield and Loxley Hall in Uttoxeter are among the schools that will now be able to continue to provide overnight accommodation and extended days for their pupils.
These stays include preparing care plans to help the pupils develop the skills they need to improve behaviour, develop confidence and be able to live safely, healthily and happily, according to Loxley Hall.
More than 200 children benefit from the residential care.
One parent commented on the petition saying: "It will be our daughter's only chance of a sleepover. Every child is entitled to a childhood. This is a vital service. Not just a want, but a necessity to families like ours where it isn’t possible to have overnight provision."
Another said: "It is total madness to remove the funding for this vital provision. Don’t let this be yet another example of politicians making life-changing decisions without understanding the consequences."
It is not clear how long the planned review by Staffordshire County Council will take.
County Councillor Mark Sutton, cabinet member for children and young people, said: "The county council is implementing improvements in how we help and support children with Special Educational Needs and Disabilities, so that they are educated closer to home, or in local schools with the right support.
"Special schools have an important part to play within that SEND strategy and we have already begun a conversation with heads and governors about their role in future years.
"Although it is not a statutory responsibility to provide overnight residential accommodation, we understand how important it is to parents and carers and I have decided to include a consideration of this in the review.
"The contract for residential provision is already in place until July 2020 and we will now continue it beyond that time until any changes are ready to be implemented."
Referring to how long the review may take, he added: "Funding provision for special schools is complex, comes from central government and implementing change is inevitably a long process to allow schools to plan ahead and that may take several years."