Hundreds of occupants of an improvised camp in the square chanted "The people united will never be defeated!" when they heard the news.
“This is a victory for us,” spokesperson Tania Barragan told the AFP news agency.
Brookfield Properties said they believed they could come to an arrangement with the demonstrators to “ensure the park remains clean, safe, available for public use and that the situation is respectful of residents and businesses downtown”.
The news was made public in a statement from deputy mayor Cas Holloway.
"Our position has been consistent throughout: the city's role is to protect public health and safety, to enforce the law, and guarantee the rights of all New Yorkers," it said.
On Thursday the protesters cleaned the square themselves and called on supporters to help prevent the authorities from throwing them out.
New York Mayor Michael Bloomberg had urged the protesters to leave, promising they could return after the cleaning, but police chief Ray Kelly said they would not be allowed to bring back tents and camping equipment.