Parents have described the services offered by the Northern Ireland Children's Hospice as "vital" as planned cuts to bed capacity are examined by the Department of Health.
The hospice made the announcement on Tuesday due to funding cuts.
On Wednesday, the department said it would "look urgently" at the plans and determine its approach by the end of the week.
The hospice's acting director said this was "really welcome".
The service had said it might reduce capacity from seven beds week-round to six beds Monday-Friday and three at the weekend.
The cost of running one bed is approximately £600,000 per year.
'Treated like normal kids'
Families who use the Northern Ireland Children's Hospice for end of life care and planned respite have called for MLAs to intervene in the situation.
They include Lisa Warren and her 13-year-old daughter Mia, who uses the respite services.
She said she loved the hospice and called for Health Minister Robin Swann to give them more money because it helps her mother get a well-earned rest.
Lisa Warren said the hospice service was "vital" for the children it supports.
"It means kids like Mia can come and have fun and lead a bit of a normal life where they are treated like kids," she explained.
"You feel safe leaving them here and you can go and enjoy a wee bit of your life knowing they are fine and well looked after."
Mr Swann has said he would like to determine the best way forward in the coming days.
He added his officials would "look urgently at the issues raised, engage with the hospice and provide a clear evidence base".
The charity provides specialist palliative care for more than 350 babies, children, and their families each year.
Acting director Grace Stewart said she was keen to "build a sustainable funding model going forward".
"What is required is ongoing money, year-on-year, money that we can be certain of... money that we can plan a service against," she said.
"The opportunity to put in place a contract that allows us to deliver a certain amount of service with a known contribution from the government."
'Godsend to families'
Stephen Knox, whose son Oscar Knox died almost 10 years ago after a two-year battle with cancer, said the news of cuts was "very disappointing".
He said it made all the difference to his family when Oscar was sick.
"It's an amazing facility - the last thing you want to hear, if you're in that position where your child is terminally ill, you might think a children's hospice sounds horrendous, but it's not.
"It's colourful, bright, airy and the staff are so welcoming," he told BBC News NI's Good Morning Ulster.
"There's so much for kids to do there - soft play, arts, games, fancy dress. I remember them driving up and down the corridors in little cars.
"They just love it and Oscar and his friends called it the holiday house.
"The work they do is phenomenal.
"It was like weight was lifted off your shoulders," he said.
"It's great to see Stormont back and I know they have so many people to please but the hospice work is so vital. No-one wants to think of their child dying but the hospice is a godsend to families," he said.
The organisation said it was consulting with families and staff who may be impacted.
Only two days into the job and the new health minister is faced with an emotive story triggered by funding cuts.
The problem facing Robin Swann is that there are dozens of other similar stories out there that all need funding.
Behind every story there is a plea for families and staff for their service to be saved.
It is real life and a legitimate call for help.
The problem is the coffers cupboard in the Department of Health is pretty bare.
Ms Stewart said she profoundly regretted the reduction which was led by the need to ensure "the long-term sustainability" of the service.
"Given the loss of government funding for one of our beds, our intention is to run six beds Monday to Friday and three beds Saturday and Sunday: this is a change from our seven-beds, seven-nights model," she said.
"Despite these challenges, our unwavering commitment to supporting children and their families remains."
The Northern Ireland Children's Hospice is the only local service of its kind and it requires more than £20m annually.
According to the charity, the majority of its funding comes from the "generosity and kindness of the local community".
Ms Stewart told BBC News NI that some staff have begun a consultation process around potential redundancy.
The department said it "recognised the vital role of hospices and has consistently resourced them to help deliver the critical services they provide".