Anti-capitalist protesters could remain camped on the doorstep of St Paul's Cathedral for the next two months after The City of London Corporation offered to halt legal action until the new year.
Occupy London Stock Exchange said corporation representatives have agreed to shelve their bid to evict demonstrators on the condition that the number of tents pitched outside the historic church are reduced.
The offer was made on Wednesday during a meeting between protesters and legal representatives from the City's governing body, the campaign group said.
Occupy London member Tina Rothery, who attended the talks, said: "We would have to make a slight reduction in tents in order to free up space for the fire brigade. There's a hindrance of access for St Paul's churchyard. We're not blocking it but they would like more space."
The offer, which is yet to be confirmed by the Square Mile's municipal government, is expected to be discussed by demonstrators.
St Paul's suspended legal action against the protest camp on Tuesday, prompting the corporation to announce it would be "pausing" its legal bid. Officials were due to hand a letter to the demonstrators warning them they had 48 hours to clear the site or face High Court action.
Stuart Fraser, the corporation's policy chairman, said the main objective was to ensure the highway was clear.
"The church has changed its position with regards to a camp being on its land, which means that we have had to rethink as well," Mr Fraser said.
"So we have pressed the pause button so that discussions can take place with protesters and others on how we can resolve the problem we face as a local authority - namely camping on the public highway."
He said the protesters did not have the right to camp on a public highway indefinitely and the corporation had a legal obligation to maintain access to the highway.