Earlier in September, a Derry City and Strabane District Council committee proposed A Stitch in Time be removed from the former Rosemount shirt factory because of cost concerns.
That sparked an angry backlash from local people and former factory workers.
However, councillors have now voted to delay a decision over its future.
“The decision to defer means that no decision will be made until there is clarity,” SDLP councillor Rory Farrell said.
“In the meantime, nothing is going to happen to the sign, it is going to remain in place,” he said.
The work was commissioned by public art organisation Artichoke as one of a number of light installations for Derry’s UK City of Culture programme.
A council spokeswoman said since the initial decision by its business and culture committee it has “proactively engaged” in discussions with Artichoke.
The public art organisation has “outlined their commitment to working with us to make every effort to retain the installation at its existing location”, she said.
The spokeswoman added: “Officers have also been approached by the local cultural group keen to ensure the piece remains on the current site.”
She added that councillors will be updated “in due course”.
At one time, the city was home to 44 shirt factories and a world leader in shirt production.
The firms employed thousands of people, mostly women and girls.
A Stitch in Time consists of a 22-metre long and two-metre high artwork of steel letters adorned with hundreds of LED bulbs forming the words “A Stitch in Time”.
Earlier in September, the council said the tribute required “additional recommissioning works” costing £12,350 and had ongoing annual costs of £6,950.
The council added that it had a budget of £20,000 for the upkeep of more than 80 pieces of public art.
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