The Supreme Court last month ruled that the board would have to seek approval to release funds to state associations.
Less than 24 hours before the high-profile series was due to begin in Rajkot, the cash-rich board dropped a bombshell by telling the Supreme Court it would not be able to cover the running costs of the first match.
The Supreme Court last month ruled that the board would have to seek prior approval from a special panel investigating its governance in order to release funds to state associations which host Test matches.
In a petition filed on Tuesday to the court, the Board of Control for Cricket in India (BCCI) said that "unless money is disbursed to the board, the match between India and England can't take place".
After considering the petition for several hours, the court set aside its previous order and gave the board immediate access to the $90,000 (5.8 million rupees) the BCCI said it needed to host the match in Rajkot.
It further allowed the board to incur expenses for hosting the remaining four Tests in the series against England but asked it to maintain accounts for scrutiny by the panel.
"We are fine with the supreme court order because we wanted money for organising the India-England test series and that has been allowed," a lawyer representing the board told AFP on condition of anonymity.
The court had slapped the restrictions on the BCCI's accounts after the board, which is one of the world's wealthiest sports bodies, failed to implement a series of reforms recommended by a panel headed by a former top judge, Rajendra Mal Lodha.
The Lodha panel has accused BCCI officials of "behaving like lords" after they repeatedly ignored the deadlines to implement reforms of what is world cricket's wealthiest and most powerful board.
In its submission challenging Tuesday's petition, the panel said the BCCI was in contempt of court by not implementing its recommendations, which include age limits for office-holders.
The BCCI had earlier complained that the funding freeze was hampering organisation for a series last month against New Zealand, but the three Tests went ahead as scheduled in the end.
The BCCI has insisted it is not "running away" from implementing the reforms after scandals including accusations of corruption and match-fixing that tarnished the Indian Premier League (IPL).
Cricket's massive popularity in India has helped the BCCI become by far the wealthiest of all of cricket's national boards, netting massive money from sponsorship and TV deals.
The BCCI has put the value of the IPL brand at $4.5 billion and its current sponsorship deal for the tournament with the mobile phone company Vivo is worth $60 million dollars.
Its last television rights deal with the Star network was worth a reported $750 million.
But despite its rude financial health, the board has regularly found itself embroiled in scandal in recent years, ultimately leading to the formation of the Lodha committee.
A corruption and match-fixing scandal in the sixth edition of the IPL in 2013 brought about the downfall of the board's president Narayanaswami Srinivasan after his son-in-law was accused of betting on matches.
Two of the eight franchises in the IPL were suspended as a result of the scandal, including the Chennai Super Kings which was owned by Srinivasan's India Cements company.