The sequence 体は小さいけれど元気な serves as an adjectival block which modifies [一寸法師]{いっすんぼうし}. 体は小さいけれど元気な一寸法師 is object of the verb 気に入り, in turn. 大臣[大臣]{だいじん}(は) is its subject. So, the whole sentence has kind of a nested structure, and the two は belong to different levels respectively.