The Boxing Kangaroo flag will remain flying in the Winter Olympic Village following discussions between International Olympic Committee (IOC) president Jacques Rogge and Australian Olympic Committee president John Coates in Vancouver.
The flag was raised upon the arrival of the Australian team in Vancouver a week ago.
Coates has announced the IOC would not be asking the Australian team to take down the flag.
"The IOC has a clean venue policy in order to protect the commercial rights of its sponsors," Coates said.
"But clearly on this occasion Australia was not trying to ambush either the IOC or VANOC (Vancouver Olympic Committee)."
"We are not selling authorised Boxing Kangaroo merchandise in Vancouver, nor is it available online."
"We will, however, need to register the Boxing Kangaroo going forward."
"The Boxing Kangaroo has been used as the Australian team mascot since the Sydney Games."
Australian team Chef De Mission Ian Chesterman said the team welcomed the decision.
"A big cheer went around our quarters when the word came through that the Boxing Kangaroo could stay," Chesterman said.
"I thank the IOC for their understanding in allowing us to keep the Boxing Kangaroo flag in the village."
"We certainly understand the need for the IOC to be vigilant to protect all the stakeholders who make the Games happen, and appreciate their ruling that our Boxing Kangaroo, in this situation, does not undermine the rights of others."
"Every Australian athlete that has arrived in the Vancouver Olympic Village has been thrilled to see BK flying high."
"It's our team mascot, an iconic Australian sporting symbol."
"In fact, athletes from all around the world have been lining up to have their photo taken outside the Australian team headquarters, so popular has the flag become."