Set up by those who used the services themselves, those with military backgrounds will be able to take short breaks at Combat Stress Audley Court in Newport under the new plans.
The decision was made after a meeting between Combat Stress and bosses from the Veterans' Respite Centre, which was formed out of a protest group trying to fight cuts at the mental health charity.
The new services will be based in D Wing of Audley Court, and will give veterans somewhere to go when feeling stressed or when struggling with issues such as post-traumatic stress disorder.
The wing is expected to be available Monday to Friday and will offer a safe space for veterans to visit, along with food, television and facilities for overnight stay.
The veterans will initially be able to run their respite centre for three months.
Pete Neale, who started the Save Audley Court Facebook group and is heading the Veterans' Respite Centre, said it was now a matter of funding.
"I know it’s been a long time but let’s hope that all the hard work pays off," he said.
"It's amazing news that Combat Stress has agreed to the Veteran's Respite Centre.
"Now we need to start fundraising so we can get off the ground."
Veterans are already collecting funds towards the upkeep of D wing, including car boot sales.
There are also plans to set up a direct debit scheme to help support them.
Nearly 40 members of staff were made redundant across Combat Stress last year.
The charity’s chief executive Sue Freeth said cuts had to be made to its services else it risked closing down entirely.
“We do need to get back in the black, because if we don’t then we won’t be sustainable,” she said. “That would be terrible.”
But dozens of veterans came out in protest of the cuts, marching through Newport in October and again in December.
Without residential services, veterans said, their mental health issues meant that they posed a risk to themselves and those around.
The decision to stop residential treatment was part of a five-year restructuring plan which, the charity said, would “offer greater flexibility and accessibility to treatment so veterans can be supported more quickly”.