A decision to allow a young Thai man facing deportation from Shetland to stay in the UK will not be challenged.
The Home Office decision was welcomed by Makao
Judges had said it was wrong to try to deport Sakchai Makao, 23, as a foreign national with a criminal record.
The Home Office said there were no legal grounds for challenging that ruling.
Makao told the BBC Scotland news website: "It's great news and now I just want to get back to normal. I want to thank all my supporters."
Makao spent eight months in jail in 2004 for fire-raising on Shetland, where he has lived since he was 10.
He was arrested as part of a clampdown on foreign nationals with serious criminal convictions.
About 9,000 Shetland residents signed a petition backing Makao and 2,000 added their names to an online campaign.
His successful deportation appeal was heard in North Shields in Tyneside on 7 July.
The judges later published their written judgement and ruled that he should be allowed to remain in Shetland. The panel said the UK Government did not take his circumstances into account.
A Home Office spokesperson told BBC Scotland it had decided there were no legal grounds for challenging that.
Makao said: "I did not really know what to expect so it's great news.
Thousands of islanders showed their support for Makao
"All the hard work of my supporters has paid off, it's been great, and everybody is still very supportive."
Orkney and Shetland MP Alistair Carmichael, who campaigned on Makao's behalf, said: "I am delighted that the Home Office have given up a fight they never should have started.
"However, they argue that they will continue to make decisions on deportation based only on criminal records and not look at individual circumstances too.
"This is something on which I shall be seeking further explanation from the Home Office."
The tribunal hearing heard Makao's fire-raising was committed when his stepfather had just died from cancer and a baby he had with his girlfriend had passed away only a few hours after birth.