The Office of Rail and Road (ORR) has removed a prohibition notice imposed on WCR in February, saying its safety concerns had been addressed.
The ban by the regulator followed a series of incidents in England by Britain’s biggest steam operator.
These included a train running through a red light to cross the Great Western main line less than one minute after an express train had passed.
WCR and the driver involved face criminal charges.
The Jacobite, which carries 85,000 passengers a year, is due to run between Fort William and Mallaig from May to October.
The ORR said it had received evidence of assurances that steps had been taken to remedy the issues it had identified.
Those included the introduction of clearer governance structures with proper accountability for safety, more robust risk assessments, and enhanced processes for managing staff, with a focus on safety.
ORR director of railway safety and HM Chief Inspector of Railways Ian Prosser said: “I am satisfied WCR has now taken all the necessary steps to address the issues of concern on safety.
“We shall continue to closely monitor WCR to ensure their approach is embedded into the culture of the company and they fully comply with all the commitments they have made.”
WCR managing director Patricia Marshall said: “The safety of our passengers and staff has and will remain our first and utmost priority.
“Until very recently, West Coast Railways had a good safety record.
“With the support and encouragement of our regulator and our many friends in the industry, we look forward to re-establishing our reputation for providing safe and wonderful railway experiences across the length and breadth of the country.”