Chile qualified for the World Cup by beating Colombia in October
The threat of Chile being thrown out of the 2010 World Cup looks over after domestic club Rangers backed down in their legal battle against relegation.
Chile had been warned by Fifa that their World Cup place was in jeopardy after Rangers turned to the Chilean courts to try and avoid the drop.
Fifa does not approve of civil or government intervention in football.
"The Rangers case has been overcome," said Claudio Olmedo, a spokesman for Chile's football association.
"It has been withdrawn from the Courts of Justice."
Rangers were relegated after they were docked three points for fielding one foreign player too many in a match.
Fifa was unhappy with their proposed legal action and this week football's world governing body wrote to the Chilean Football Association urging it to persuade Rangers to drop the case, which they have now done.
"All the artillery was against Rangers - Fifa, the Chilean FA and the other clubs," BBC South American football reporter Tim Vickery told the World Service.
"It was the threat of disaffiliation, the threat of Chile not going to the World Cup that proved key. It was in the light of that that Rangers' creditors entered into contact with their administrator and instructed him to withdraw the action.
"The determining factor here was the stance of Fifa and the threat of missing out on the World Cup.
"Petty squabbling is unfortunately part and parcel of South American football but Chilean football is on the move.
"A decade or so ago all of the clubs were in huge financial problems. We have had changes in legislation and the clubs can now become businesses.
"That was a move Rangers considered but the size of their debt prevented that and forced them into administration, so that's why relegation for them is bad news and why they fought hard to avoid it.
"It might leave a bad impression of Chilean football but it's been settled very quickly."
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