The London Eye, which is rumoured to be facing eviction, will be there to enhance the city's 2012 Olympic bid, according to the Culture Secretary.
The Eye has proved to be a huge hit with tourists
Under the original lease the Eye was to vacate its South Bank site by 1 July, and there were reports it faced a huge rent hike if it were to stay.
But Tessa Jowell told MPs on Monday the observation wheel would stay.
She said an agreement would be reached on its new lease - negotiations between the Eye and its landlords continue.
The South Bank Centre (SBC) , which owns some of the land on which the Eye's support structure stands, has denied it planned to raise the rent from £65,000 to £1m a year.
It has agreed not to apply to court for possession of the site while negotiations over a new lease were ongoing.
At Commons question time on Monday, Labour MP Harry Cohen asked Ms Jowell to keep a "close watching brief" on the negotiations and to consider listing the Eye to recognise its importance.
Ms Jowell replied: "Negotiations between the London Eye and the South Bank Centre are continuing but the London Eye is here to stay.
"It will continue to give millions of tourists and Londoners every year pleasure and will continue to enhance London's bid for 2012.
"I have no doubt an agreement will be reached on a new lease.
"The clock is stopped while the negotiations continue and of course it is important that both parties get it right."
She did not agree that the 450 ft Eye, which has proved a huge hit with visitors since it opened opposite Westminster in 2000, should be listed.
The row has seen Mayor of London Ken Livingstone brand SBC chairman Lord Hollick a "complete prat" and urge him to step down.
But reports that rival Olympic bid city Paris wanted to buy the Eye were denied by the city's own 2012 team as "laughable".