Miss Universe New Zealand has been granted a reprieve by organisers and will represent her adopted country if her citizenship can be fast-tracked.
The Herald understands that Avianca Bohm will be allowed to compete in the world event in December if she holds a New Zealand passport.
Organisers of Donald Trump's Miss Universe pageant have advised New Zealand licensee Val Lott and Ms Bohm of the ruling.
It is another twist in a row that erupted when it emerged Ms Bohm, who was born in South Africa, does not have New Zealand citizenship.
Ms Lott had previously delivered a letter to Ms Bohm advising her that she was ineligible to represent New Zealand.
She also held meetings with the beauty queen in an effort to persuade her to give up her title.
In response, Ms Bohm sought legal advice and appeared on television saying that she felt bullied to step down.
Neither Ms Lott or Ms Bohm could be reached for comment yesterday.
The Herald has been told organisers have given Ms Bohm a deadline of August 1 to hold a New Zealand passport.
However, another source said that as long as she turned up to the December event with a New Zealand passport she would be allowed to take part.
The Department of Internal Affairs will not comment on individual applications for citizenship. The Minister of Internal Affairs, Chris Tremain, approves or declines citizenship applications.