"Those who want to hold the graduation in a church, a tradition that goes back generations in many districts, should be able to do so," Education Minister Jan Björklund told news agency TT.
"Certain religious elements will be permitted. It is inevitable when you have a particular religious setting in a church."
In November 2012, the Swedish National Agency for Education (Skolverket) decided that school events must be free from religious elements and religious affiliation.
"The law stipulates that Swedish schools are non-confessional," Skolverket's Anna Ekström said at the time.
"That school is non-confessional means that there can't be any religious elements such as prayer, blessings or declarations of faith in education. Students should not have to be subjected to religious influence in school."
The decision rubbed Björklund the wrong way.
"I think we should cherish our cultural heritage," Björklund responded. "Celebrating the end of school in a church has gone on for generations in many parts of Sweden."
Citing frustrations that the "ridiculous debate" came around every year, in December 2012 Björklund ordered an official review of the Education Act.
A year later the review was completed, with the conclusion that the government should amend the rules to make clear that graduations and other school events should be permitted to take place in church, with priests and psalms.
Björklund cited as example that a priest should be able to explain why Christmas is celebrated, and that the traditional hymn "Den blomstertid nu kommer" (Now the time of blossoming arrives) should also be allowed.
The clarification of the Education Act was presented by the government on Tuesday.
Björklund clarified the ceremonies should be designed so that everyone, regardless of religion, feels welcome. If a student does not want to participate, he or she will of course have the right to abstain.
"Many immigrants are surprised at how bad we are at celebrating our traditions," Björklund commented. "It is rarely immigrants who criticise [religious elements]. It is the Swedish left who always argue about it."
Isabela Vrba/The Local