Controversial plans to close the neurosurgery unit at Morriston Hospital in Swansea and centralise the service in Cardiff have been put on hold.
Campaigners claimed Morriston was better placed geographically to serve south Wales
Health Minister Edwina Hart told the assembly she wanted a fresh approach.
The plans to create a single service in Cardiff were announced in 2006 after a Health Commission Wales report into south Wales neurosurgery.
Ms Hart also said would investigate the possibility of establishing an spinal surgery unit in Wales.
Neurosurgery treats disorders of the nervous system including diseases of the head, brain and spine.
Currently, adult neurosurgery is performed in both Cardiff and Swansea.
Swansea previously lost its child neurosurgery operations to Cardiff in November 2004.
Since the overall move to Cardiff was proposed a year ago, a high profile campaign of opposition has been underway in Swansea.
In October, five AMs from south west Wales constituencies wrote to the then health minister Brian Gibbons asking him to consider other factors before moving neurosurgery between the two cities.
In November, Dr Gibbons then decided to delay the controversial decision until after the assembly election, and asked Health Commission Wales (HCW) to reconsider its proposal.
More than 100,000 people signed a petition opposing the change.
In April, campaigners marched through Swansea carrying a coffin to highlight concerns about the future of the city's overall health services, including neurosurgery at Morriston.
Swansea NHS Trust also argued Morriston Hospital was better placed geographically than Cardiff's University Hospital of Wales to serve all of south Wales.
But at the time it published the report in July 2006, HCW said a single service in Cardiff would help safeguard the future of this service in south Wales, and would allow it to develop a wider range of neurosurgical services for the region.
This decision, it added, was based on "solely on improving patient care".
After making the announcement, Ms Hart said: "As long as operations are safely dealt with in both Cardiff and Swansea, this is what is going to happen.
"It is the people of Wales who pay their taxes to ensure they have the health service they want."
Welsh Liberal Democrat AM for South west Wales Peter Black, said he welcomed the health minister's announcement because it meant that neurosurgery services remained open in Swansea for the time being.
He also felt the delay indicated there was an "overwhelming case" for keeping neurosurgery in Swansea.
But he did accuse the minister of "fudging" and "putting off" the decision, and questioned the need for a review.
"Clearly if there is going to be a review of what is in Wales, they are just going to report what has already happened," he said.
"It is time to make a decision and I think the overwhelming case is to keep this service in Swansea."
Elin Ifan from the Wales Neurological Alliance, an umbrella group that represents patients, warned that south Wales did not have big enough a population to sustain two specialist centres for neurosurgery, and that the minister would have to make a decision soon.