The London Fire Brigade Museum in Southwark Bridge Road, which had been due to close at the end of this month, will remain open until June after a last-minute budget amendment was agreed by the London Fire and Emergency Planning Authority.
The museum has seen a sharp increase in visitor numbers in recent years even though it is usually only open by prior appointment.
The Conservative chairman of LFEPA, Cllr Brian Coleman AM, told Thursday's meeting that he was "deeply concerned" by the estimated costs of the closure of the museum which he feared had been "somewhat exaggerated" by officers.
Although the museum's net running costs are just £81,000 a year, LFEPA puts the cost of closure and storage of the collection at £276,000.
Cllr Coleman announced that he was withdrawing his proposal to close the museum and has asked for a new report on the future of the collection to be brought to the first meeting of the fire authority after the London mayoral elections to be held on 3 May.
He confirmed that the museum's collection will remain in situ for the time being. Although the authority plans to sell its Southwark training centre and the adjacent Winchester House, the chairman said he did not expect that it would have to vacate the buildings for at least 18 months.
Cllr Coleman added that his decision to defer a final decision on the future of the historic collection held by the authority would also the museum to stay open until June.
Speaking after the meeting, Mike Tuffrey AM, a Lib Dem member of the fire authority, said: "Well done to all those campaigning to save the museum.
"I'm please we have persuaded the Conservative administration to stop their senseless, financially daft proposal.
"Now the fight needs to go on. We need a permanent site, with a combined museum for all the 'blue light' services."
Simon Hughes MP recently met the LFEPA chairman to discuss plans for the museum.
"Today is an historic day: London’s Fire Brigade Museum has been reprieved and will not now close at the end of the month," said the Bermondsey & Old Southwark MP.
"At last there is the political will to find a new and better home for the London Fire Brigade Museum and hopefully a venue for a London blue light museum which would be a very exciting addition to London's museums and educational centres.
"I am grateful to the chairman and commissioner for responding positively to my call for the museum to be saved – I hope this reprieve will encourage all those interested in the history of our capital to work with us to find the new home which the Museum needs and deserves."