The commission, which earlier this month moved to withhold $23,000 from the department, made its decision after hearing from concerned citizens and the town's new fire chief.
Philadelphia Alderman John Drinnon, a candidate for mayor of Philadelphia in the November election, was among those who spoke to the budget committee.
"I'm pleased that the County Commission was able to see that the fire department is a vital asset to this community," Drinnon said.
Philadelphia residents, who amount to 500 or so, pay county taxes and are entitled to the financial support of the county, especially when it involves vital services, Drinnon said.
County Commission Chairman Roy Bledsoe, who represents Philadelphia, said he was pleased the committee changed its recommendation. Bledsoe said he spoke with Loudon County Mayor Estelle Herron beforehand, asking for her help.
"We got a good rating," Bledsoe said of the town's fire department. "If we lose it, everyone will have to pay higher insurance rates."
Herron said she had no problem returning the funding. She said she is concerned about the future of Philadelphia and wants the town to succeed. She said she has offered the town other forms of assistance including help managing its accounting.
"We really hope things will be improving," she said.
Commissioner Bob Franke said earlier this month he was concerned about the fire department's call responses. After Tuesday's meeting Franke said he was impressed with new fire Chief Bobby Schubert and his description of some of the changes being made.
"I was very encouraged. They have improved their response from down in the 30 percent to 40 percent range up to around 70 percent in the last few months," he said.
Franke said the commission still will keep a close eye on the small town. The budget committee agreed to provide each quarter part of the proposed $23,000 in funding. "We'll be evaluating them every quarter," he said.
Schubert said he was happy to hear county funding would be restored. He said he has been working hard to bring the response rate back up and to increase staffing on the volunteer department.
"We're training more EMTs and more first responders so that we'll be able to offer a better response to more of these calls," he said.
Philadelphia still has open slots for candidates on the November ballot. Drinnon and James Russell have signed up to run for mayor. No one has picked up a petition to run for any of the four alderman seats that are open.