However the global ratings agency said they may reevaluate their decision in as little as a few months should they see little progress being made.
"We remain pessimistic about the government's ability to close existing budget deficits and return a balanced budget by the year ending June 30, 2021," S&P Global said in a press release.
"Over the coming months, we will continue to monitor the government's willingness and ability to enact new budget savings or revenue measures to reduce fiscal deficits materially over the next few years."
The move was mirrored by Fitch, another of the 'big three' ratings agencies, who also reaffirmed Australia's AAA rating, saying it expects the country's public debt ratios to remain in line with the median criteria for the grading.
Australia stuck to its ambition of returning the budget to surplus in 2020-21 on Monday despite downgrading growth forecasts and fears of losing the coveted AAA credit rating.
The country's resources-driven economy has enjoyed more than 20 years of growth but it is now transitioning out of an unprecedented mining investment boom, and the going has been bumpy with revenues under pressure.
In a mid-year fiscal update, the government revised down the nation's cash deficit of $37.1 billion in 2016/17 - as announced in the May budget - to $36.5 million.
But it forecast widening deficits in the next three years before a return to surplus.
"The government's plan to restore the budget to balance remains on track," Treasurer Scott Morrison said in a statement.
Higher iron ore and coal prices would help support tax revenues, the update said, but this would be more than offset by weaker wage and non-mining company profits.
After knife-edge elections last year, Standard and Poor's warned Australia's rating could be lowered if Canberra did not improve its budget balances and deliver on surplus plans.
Australia is one of only a handful of countries to hold the top AAA rating from all three major agencies, also including Moody's and Fitch, having dodged a recession during the global financial crisis.
Generally, losing the AAA means the nation would be forced to pay higher interest on its debt.
The conservative government does not have a majority in the upper house Senate, meaning it has struggled to pass some spending cuts.
This has stymied efforts to rein in debt and deficits, undermining business and consumer confidence with repercussions for the economy, which contracted 0.5 percent in the September quarter.
Given the poor quarterly number, the update changed the government's forecast for annual growth to two percent in 2016/17 rather than 2.5 percent as previously predicted, before rebounding to 2.75 percent the following year.
Budget review sees commodity prices easing
The federal government has taken a somewhat conservative view on the price forecast for Australia's biggest export earner commodities in its mid year budget review.
Despite a surge since the May budget, Canberra is forecasting iron ore prices to decline from an average $US68 a tonne across the quarters ending March 2017 and June 2017.
Prices are expected to drop to $US55 a tonne in the quarter ending September 2017.
Metallurgical coal prices are forecast to remain at $US200 a tonne through the March 2017 and June 2017 quarters, but then slip to $US120 a tonne in the September and December 2017 quarters.
