Citing traffic congestion at the busy Hazra crossing, police had earlier denied permission to CPI(M) for the rally by former chief minister Buddhadeb Bhattacharjee.
"We have given consent for holding the rally. But we have told them to ensure that traffic remains normal," a senior police official said.
CPI(M) welcomed the decision and said traffic movement at Hazra would remain unhindered during the rally.
Earlier this month, the party was not permitted to hold a public meeting at Shyambazar five-point crossing in north Kolkata. The rally was held later at a different spot in the same area.