"I've just heard from my lawyer that the minister has overturned the decision by Immigration and that I've been granted a visa and I've just got to go through the motions and fill out the necessary paperwork," he said.
"I think the minister has behaved very ethically."
Middleton said he still had issues with the Government since Karla's 1989 murder.
"I have to be honest, I had a few problems with the system after Karla and what happened with her.
"It hasn't been a happy relationship but maybe this goes some way to fixing things up a bit."
Karla was 13 when Paul Dally snatched her from Lower Hutt in 1989. He raped and tortured her before burying her alive.
Dally has been in prison for 28 years, having been denied parole several times.
Middleton was living in Whanganui when he was sentenced to nine months' imprisonment in 2001 for threatening to kill Dally, but the sentence was suspended and he did not serve time.
His outspoken comments about Karla's killer aroused widespread support and saw him bid to enter Parliament as MP for Whanganui on a law-and-order platform that included bringing back the death penalty for certain crimes.
Middleton said no big celebration was planned following the news that he would not be deported. Instead he would have a quiet evening with his family "and make plans for the future."
Middleton's 16-year-old son, who is Karla's half-brother, was "really stoked."
"He was probably the most relieved of all - we had a bit of a handshake and a high-five."
A letter from his son, pleading with the minister to let his father stay, was among documents Middleton delivered to Parliament earlier this week to support his application for a review.
The deportation threat followed a raid on his workplace by police last week who arrested him and held him in a cell for 36 hours.
Middleton's lawyer Keith Jefferies said he would look very closely at the propriety of the action and "would probably sue" Immigration New Zealand over its treatment of his client.
"They had no right to do it the way they did it, and that's quite serious. There's a whole list of breaching his civil rights - it's quite outrageous to be dragged out of your workplace."
Jefferies suspected Immigration NZ had lost Middleton's records from the time he arrived with his parents in 1962.
Immigrants from the UK were granted permanent residency if they arrived before April 4, 1974.
