Squatters living in Melbourne homes acquired to build the dumped East West Link can stay put for three weeks as steps are taken to find more suitable accommodation.
An injunction granted in mid-August prevented police and the state government from forcibly removing dozens of homeless people from 13 properties in Collingwood, Parkville and Clifton Hill.
The matter was due to return to the Victorian Supreme Court on Friday afternoon, but the hearing didn't go ahead because the parties came to an agreement.
Fitzroy Legal Service lawyer Meghan Fitzgerald said there would be no action for three weeks, allowing for positive negotiations.
She said five women and seven children squatting at the properties had been offered public housing in the past week, and others would engage with support services in the coming weeks.
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"We expect that a number of those will also be considered priority as they have simply fallen through the gaps of the system," Ms Fitzgerald told reporters outside court.
"This particular proceeding was an injunction to prevent immediate removal of families and children from their homes.
"That's been successful in the sense that we've that been afforded a time period to engage in negotiation and to facilitate long-term solutions to the problems that were presenting."
The homes were compulsorily acquired by the former coalition government for the East West Link toll road before Labor pulled the pin on the project.
Squatters were handed eviction notices and were going to be removed before the legal action was taken, said the group representing the residents.
