Radomir Antic will remain in charge of the Serbia national side despite a bitter bust-up with the Serbian Football Association (FSS).
FSS president Tomislav Karadzic revealed that the experienced tactician had clung onto his post after taking a dramatic pay cut and also because of a shortage of suitable replacements.
Antic and Karadzic clashed in the wake of Serbia's early exit from the World Cup, when they were eliminated in South Africa after finishing bottom of Group D.
The former Atletico Madrid, Real Madrid and Barcelona boss will remain at the helm for the Euro 2012 qualifiers, but must serve a four-match touchline ban imposed by Fifa after insulting the referee following their 2-1 defeat by Australia this summer.
"After protracted meetings and a lot of thinking, we decided to let Antic carry on in the Euro 2012 qualifiers despite many hard feelings sparked by an ugly conflict between the coach and the FSS," Karadzic told a news conference.
"Plenty of bitter words were said; it's hardly an ideal solution but Antic stays because we have been able to halve his income and he is still the best man for the job.
"The four-game touchline ban imposed on Antic by Fifa is a downside but we trust his judgment that his staff will be able to replace him fittingly in the opening four qualifiers."
Karadzic wants both sides to bury the hatchet for the good of the Serbia side and insisted Antic would still be rewarded if he can secure qualification for the tournament in Poland and Ukraine.
"We talked to several potential replacements during the feud but always had a compromise with Antic in mind," Karadzic said.
"Apart from the pay cut, the reason that swung the decision in Antic's favour was the fact that appointing a new coach with no inside knowledge of the team so close to the qualifiers would have been a huge risk.
"We were unhappy with Antic's arrogant behaviour after the World Cup but we now have to mend our relations with him because that's in the best interest of Serbian soccer.
"He has our full support and is not living on borrowed time; we would like to qualify for the Euro 2012 finals in Poland and Ukraine but Antic will stay in charge throughout the campaign regardless of the result.
"Antic will get a bonus if we qualify but he has to earn it like he earned it when he steered us to the World Cup."