The hearings were initially to be held in private, but Mohammed Al Fayed — the owner of Harrods department store and father of Dodi — protested and had asked for a judicial review of the decision by Lady Butler-Sloss, a former judge who is overseeing the inquest.
On Thursday, Butler-Sloss "decided to reconsider," a spokesman for the Judicial Communications Office said.
"She has discretion in the matter and was persuaded that the strong public interest in the cases justified the meeting being held in open court," he said on condition of anonymity, in line with government policy. "The reasons she had in mind that led her to conclude initially that the meeting should be held in private were entirely pragmatic, such as the size of the courtroom."
In a statement, Al Fayed declared victory, saying that his threatened challenge — which was to go to court Friday — was the reason Butler-Sloss changed her mind.
"I am encouraged by this decision, although regret it only came about as a result of threatened legal proceedings," he said. "The public and I have a right to know how my son and Diana, Princess of Wales were really killed on that awful night."
The inquest, which was initially convened and then swiftly adjourned in 2004, is due to formally resume next year. The hearings on Jan. 8-9 at the Royal Courts of Justice will decide issues such as whether the inquest should be joint and if it should have a jury.
Diana, 36, and Dodi Fayed, 42, were killed along with chauffeur Henry Paul when their Mercedes crashed in the Pont d'Alma tunnel in Paris on Aug. 31, 1997, while being chased by media photographers.
Rumors and conspiracy theories continue to swirl around Diana's death, despite a French judge's 1999 ruling that the crash was an accident. An investigation later concluded that Paul had been drinking and was driving at high speed.
It is believed the official report into Diana's death will be published next week, although British police have refused to confirm that. The British inquiry, which is estimated to have cost as much as $7.2 million, employed cutting-edge computer technology to reconstruct the crash scene, and examined the Mercedes in painstaking detail.