The first beavers to live in the wild in England for 300 years are to be allowed to continue to swim free in a Devon river as long as it can be proven they are free of disease and of Eurasian origin.

Initially the government announced plans to trap the beavers, which are roaming wild in the River Otter, and confine them to a zoo or wildlife park, arguing they were an invasive species and could be carrying a disease.

But environmental campaigners – and many people who live and work along the river – launched a passionate campaign arguing the beavers were defined as non-native only because man hunted them to extinction.

Natural England’s board decided on Wednesday to grant a licence to Devon Wildlife Trust (DWT) to allow the “managed release” of the beavers back into the Otter once they had been captured and proved to be of Eurasian origin free of the Echinococcus multilocularis parasite. The trust will be allowed to study the beavers and their impact on the environment over five years.

The trial could lead to the re-introduction of the creature across England.

In a statement Natural England said: “Devon Wildlife Trust’s licence application has been thoroughly assessed against the internationally recognised guidelines published by the International Union for the Conservation of Nature.

“The licence is subject to a range of conditions, including confirmation that the beavers are of Eurasian origin and are free of the Echinococcus multilocularis parasite.

“Under the terms of the licence, by September at the latest, Devon Wildlife Trust must develop a management strategy to deal quickly with any undesirable impacts which the beavers may have on the River Otter during the trial period, as well as a monitoring programme to study their impacts.”

Andrew Sells, Natural England’s chairman commented: “Reintroduction of a species is a complicated and emotive subject and we have considered this application very carefully. Responses to our written consultation and public meetings have been generally positive and we are now satisfied with Devon Wildlife Trust’s plans for managing and monitoring the project, which will allow important evidence to be gathered during the trial on any impacts which the beavers may have.

“Future decisions by Natural England on the release of beavers will, in large part, be informed by results of this trial. The unauthorised release of beavers remains illegal and Natural England does not expect to grant any other licences for beaver release during this trial period.”

Harry Barton, chief executive of DWT, said: “This is an historic moment. The beavers of the River Otter are the first breeding population in the English countryside for hundreds of years.

“We believe they can play a positive role in the landscapes of the 21st century through their ability to restore our rivers to their former glories. We know from our own research and research done in Europe that beavers are excellent aquatic-engineers improving the flood and drought resilience of our countryside and increasing the water quality of our rivers. They are incredibly industrious animals and their hard work has benefits for people and wildlife.”

There have been sightings of beavers on the Otter for the last decade. But last year their existence was proven when local retired environmental scientist Tom Buckley took a video of the creatures last year.

The town of Ottery St Mary enjoyed something of a tourist boom as beaver spotters headed to Devon to try to spot the creatures and many naturalists argued that the beavers were good news for biodiversity and could ease flooding problems because their dams slow the rate water moves down rivers, such as the Otter.

But the government, then under intense fire from enthusiasts because of the badger cull up in nearby Somerset and Gloucestershire, risked further ire by insisting the beavers had to go.

Friends of the Earth launched legal proceedings claiming that because Britain was part of the beavers’ natural range before they were hunted to extinction, they are protected under European law. Petitions were signed, public meetings held.

The DWT came up with a practical solution, applying for a licence to release the beavers back into the wild after they had been captured and tested and then monitor them over five years.

The origin of the Devon beavers is unknown but is thought to be the result of an escape or an unsanctioned release.

According to the DWT there is evidence of beaver activity on the River Otter from Honiton to Budleigh Salterton, a distance of around 13 miles. DWT assumes there are at least nine beavers on the river, including one confirmed breeding group.

DWT has drawn up plans for the “River Otter Beaver Trial” – a five year monitoring project. This project will oversee the population, range and health of the beavers - and the effect they have on the local landscape and people. It will focus on the beavers’ impacts on wildlife, vegetation, water flow, water quality, communities and infrastructure.

In 2009 Natural England published a report that had extolled the benefits of releasing beavers back into the wild. The report said beavers could improve fish stocks and their dams could help prevent flooding by slowing down the flow of water from high ground.

The next step will be to trap the beavers and test them before they can be re-released. This will be carried out by the Animal Plant Health Agency (APHA) under a separate licence that was granted towards the end of 2014.