The Brú Aimsir homeless accommodation centre on Thomas Street will remain open until a suitable replacement facility is found.
It follows protests yesterday opposing the closure, and the news was welcomed both by former residents, current residents and local councillors.
Sinn Féin's Daithi Doolan told the Irish Examiner:
"The 42 people who are staying there can remain there until proper and adequate new accommodation is found. The other 60 beds that are currently empty, we are going to review that in the coming days."
The unit was set up as a temporary measure in the Digital Hub last November, with the aim of providing shelter during the cold winter months.
However, residents are unhappy at the way the wind-down process has been handled, and this was the primary cause of the protests over the past few days.