Stedham Primary School has been removed from a consultation process exploring the future of four schools.
Governors, supported by West Sussex County Council officers, have demonstrated significant progress with proposals to form a federation with another school.
As a result, Stedham school in Midhurst will be given more time to demonstrate that the partnership meets the governance arrangements that are required for a federation.
The position will be reviewed in April, when the need for any further consultation will be considered.
A public event for Stedham, due to take place on February 13, has been cancelled.
Cllr Nigel Jupp, cabinet member for education and skills, said: “I have been encouraged by the hard work the governors have shown over recent weeks which has resulted in strong progress on federation proposals to strengthen the school.
“My optimism – stated at a recent cabinet meeting – that this progress could be made in a short period of time has been vindicated. The commitment shown to reach this point gives me further optimism that the required governance arrangements will be put in place in time for the review in April. As a result, the consultation for Stedham has ceased.
“We have offered our support to the schools to help them secure this agreement which will bring greater certainty to the Stedham school community.”