Local education authorities in Gauteng province gave Pretoria High School for Girls 21 days to re-assess its rules after protests by students triggered a public dispute over alleged racism.
The prestigious school in the capital Pretoria was historically attended by whites only but admitted black children following the end of apartheid in 1994.
Some pupils said they were forced to chemically straighten their hair and not wear afro hairstyles that were deemed untidy.
"Learners feel that they are not allowed to wear Black hairstyles, such as Afro. Specifically, the school policy limits the length of the hairstyle," the ministry said in a statement.
"Some educators tell them they look like monkeys, or have nests on their heads."
Over the weekend, defiant black students with afro hairstyles and braids held a protest at the school against the long-standing regulations.
Politicians quickly weighed in, with the two largest opposition parties criticising the prestigious school.
It also accused the school of a heavy-handed response for calling in police and armed security guards to deal with protests.
Other allegations raised by students during Monday's talks included that they were banned from speaking ethnic languages on school premises and suffered discrimination from white teachers and pupils.
South Africa is still grappling with racial issues 22 years after the end of white-minority rule, with bitter race rows erupting regularly in politics and on social media.
The students had gathered in Soweto township to demonstrate against an order that all schools could only teach in the Afrikaans language used by whites.
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