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 church has changed its position with regards to a camp being on its land, which means that we have had to rethink as well. 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."
Canary Wharf has won a High Court injunction banning protesters after fears that the anti-capitalist demonstration would spread from St Paul's, a spokesman said. The order, which was obtained on Tuesday, prevents any protesters remaining on the site without permission from Canary Wharf Group.
In a statement, Occupy London Stock Exchange said the protesters would like to "reassure" Canary Wharf. It added: "Over the course of this week, Occupy London has engaged in productive discussion with St Paul's Cathedral and the City of London Corporation, both of whom have recognised the vital role free speech and political participation play in a democratic society.
"We have conducted ourselves with order and dignity throughout, as has been recognised by all sides. Like their counterparts on Paternoster Square, the owners of Canary Wharf appear to be deeply afraid of legitimate debate: it is worth asking why this is so."