The move follows behind- the-scenes pressure from COI bosses that Whitehall's squeeze on the Government's advertising and marketing body was too tight.
Agencies have also complained about continuous demands for better value for money.
The relaxation will ease the pressure on Alan Bishop, COI's new chief executive, to cut its costs. In the past five years, COI has been ordered to cut its unit costs by 2 per cent and has exceeded the target.
A planned further 2 per cent cut was included in COI's annual report this summer. But it was watered down this week in a written Commons statement by Douglas Alexander, the minister responsible for COI.
Instead, he said COI would have "to demonstrate continued improvement in efficiency and effectiveness on behalf of their clients".
The minister added that COI would also pilot "an enhanced customer feedback system" for its clients. But he appeared to drop a "customer satisfaction index" under which COI had been ordered to achieve an average score of 8.25 marks out of ten in the past five years.
One ministerial source said the changes reflected COI's improved efficiency under Carol Fisher, who quit as chief executive in July. "She downsized, shook it up and upped its performance," he said.
Alexander said COI's financial target was to break even by recovering its costs from its clients in Whitehall departments. Last year, it made a "profit" of £1.549 million.