Tom Williams, chairman of the 160-strong branch, was among a dozen officers and members to quit this week.
Mr Williams said he had formally closed the branch because there were no nominations to take over.
But UKIP said on Wednesday that the branch would continue under Acting Chairman Bill Wakeham.
City 'important'
An annual general meeting would be held within the next three weeks in order to hold the annual election of officers, UKIP said.
The party's acting general secretary Piers Merchant said: "Under our constitution there is a formal process for opening and closing branches.
"This branch has definitely not been closed and there is no intention for that to happen.
"Our members in Plymouth want to continue their activities. The city remains important for us."
Mr Williams has started a new group called New Battle for Britain, which has up to 30 members and hopes to contest 19 seats at next May's local elections.
The rebel group were dissatisfied at the way the party was being run.
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