The decision to allow the spelling of Wanganui with or without the "h" has been welcomed by both sides in what has, at times, been an acrimonious debate.
Mayor Michael Laws hailed the move by Land Information Minister Maurice Williamson to overturn the Geographic Board's decision to go with the "h" as an "early Christmas present for the city and district".
Ken Mair, a Maori activist and one of the driving forces in seeking a change in the spelling of the city's name, said after conveying the decision to local Maori at a city marae: "We recognise it was a difficult and courageous decision to make, but the correct one.
"The Crown have done the right thing from our point of view in that they have given clear directions to Crown agencies to ensure that our name is spelled correctly. We are delighted.
"This is a journey that was begun by some of my aunts and cousins who have since passed away, but I am sure if they were here they would celebrate today that the Crown has finally acknowledged the correct spelling of our name," he said.
Mr Mair said the decision was a transitional process from a Maori point of view.
"Inevitably it will lead to the correct spelling of our name and that eventually everybody will spell Wanganui with an 'h' in it."
Mr Laws said that effectively the decision allowed the people of Wanganui to determine their own identity and destiny and that essentially there would be no real change to the situation that had existed since 1991, when the river was given an "h" by the Geographic Board.
"Both variants are already used and the minister's decision recognises that reality," the mayor said. "It was an option that my council put to both iwi representatives and the board, but they both publicly rejected it.
"The council will remain the Wanganui District Council and most locals will carry on as if nothing has changed."
The only dissenter at the minister's press conference was an unidentified Maori man who said the decision overrode "cultural standards".
The MP for the local Te Tai Hauauru Maori electorate, Maori Party co-leader Tariana Turia, described the decision as uplifting.
"It is time for all of us to move on, together, to ensure that the integrity of the language is upheld and that we can all be proud of the name given to this area by an ancestor over 600 years ago."
Three out of four people in this year's referendum voted for Wanganui over Whanganui.
At least three of the city's oldest institutions are not planning any changes. Andy Jarden, manager of the Wanganui Chronicle, the country's oldest daily newspaper, said: "We have reflected the name of the city for 150 years and will continue to do so. If and when the city decides to change the spelling then we would consider it."
Wanganui Jockey Club manager Fiona Pickering said the club would retain the name by which it had been known since 1848.
Wanganui Rugby Union chief executive Dale Cobb said it was unlikely the union would change its spelling.
"We are traditional and like to stick with what we have."