Environment Secretary George Eustice acknowledged a de-escalation from French president Emmanuel Macron as he held off on the action against British boats that he had warned could have been implemented on Tuesday.
But the Cabinet minister said a meeting between Brexit minister Lord Frost and his French counterpart on Thursday would be “very important” as further talks with the EU are also scheduled.
In another de-escalation, Mr Eustice suggested that a British vessel impounded during the diplomatic storm because of an “administrative confusion” has now been released by France.
Mr Macron had warned that Paris could block British boats from landing their catches in French ports and tighten customs checks from midnight in protest at what they claim is a refusal by the UK authorities to grant licences to French boats.
But France suspended the threats at the eleventh hour as negotiations continue.
Mr Eustice told Sky News: “We welcome the fact France has stepped back from the threats it was making last Wednesday.
“We’ve always said we want to de-escalate this and always said we have an ever open door to discuss any further evidence France or the EU might have on any additional vessels they’d like to have licensed.
“France has clearly taken a decision not to implement some of the decisions they threatened last Wednesday, we very much welcome that, but I think there’s going to be a very important meeting on Thursday between Lord Frost and his opposite number, not just on fisheries but a wider range of issues as well.”
The Scottish-registered scallop dredger, the Cornelis Gert Jan, which was caught up in the diplomatic row was believed to have been released.
But Mr Eustice said the captain, understood to be an Irish national who had a court hearing scheduled for next August, must still return in the future amid “further discussions”.
“I understand that vessel has now been released and I think there’s going to need to be some further discussions, clearly there was an administrative error at some point,” he told Sky News.
He subsequently described the issue on BBC Breakfast as an “administrative confusion” due to a change in the engine.
The European Union said talks convened with officials from France, the UK, Jersey and Guernsey would continue on Tuesday.
“Further meetings are planned for later in the week,” a European Commission spokeswoman added.
On Monday night, just hours ahead of the deadline set by Paris, the French president was reported to have told journalists at the Cop26 summit in Glasgow: “Since this afternoon, discussions have resumed on the basis of a proposal I made to Prime Minister (Boris) Johnson.
“The talks need to continue.”
“My understanding is that the British were going to come back to us tomorrow with other proposals.
“All that will be worked on.
“We’ll see where we are tomorrow at the end of the day, to see if things have really changed,” he is reported to have said.
“My wish is that we can find a way out on all these issues.”
Mr Macron and Mr Johnson met briefly as the French president arrived in Glasgow.
And officials from the two nations were involved in talks convened by the European Commission in Brussels.
Earlier, Downing Street said it had “robust” contingency plans in place if Mr Macron’s government carried out threats to disrupt trade from midnight.
Foreign Secretary Liz Truss said the UK would take legal action under the UK-EU Brexit trade deal, and a tit-for-tat retaliation to French action had not been ruled out.
The UK has granted licences to 98% of EU vessels which have requested permission to operate in British waters.
But the dispute centres on access for small boats, under 12 metres, wishing to fish in the UK six to 12 nautical mile zone.
The government in Paris was angry that the UK originally granted only 12 licences out of 47 bids for smaller vessels, a figure which has now risen to 18.
Only boats which can demonstrate they have fished in UK waters for one day in each of the years between 2012 and 2016 qualify for a licence.
The Elysee Palace had said that without movement from the UK Government, the retaliatory measures would come into force at midnight, the French news agency AFP reported.