The Fire Fighters Charity, which owns sheltered housing scheme Marine Court, in Fitzalan Road, told residents that they may have three years to pack up and leave, so a therapy centre could be built on the site.
Two months, and an extensive online, media and poster campaign, later, they have been told they can stay.
Ernie Adams, 62, who co-ordinated the protest, said he was ecstatic with the decision, which he was told about during a meeting with charity chairman Keith MacGillivray and Nick Gibb, MP for Bognor Regis and Littlehampton, who has been working with residents.
"Me and Nick just looked at each other, we were shocked.
"I was a good job that I was sitting down, because if I hadn't have been I would have fallen over!
"It's a victory for us, no doubt about it.
"We have been told there will be changes, and I don't know what they are yet, but the fact that we are staying here, and that the community is staying together, that is a big plus."
The outfit of choice for the Marine Court protesters during the campaign became t-shirts printed with a Littlehampton Gazette front-page reporting the plight.
"I think that the press coverage had been excellent," said Ernie.
"The Gazette have been stars, and I think that, more than anything, has changed the result."
A spokeswoman for The Fire Fighters Charity, which has therapy centres in Devon and Cumbria, said that the closure of the sheltered housing had only ever been a "possibility".
She couldn't comment on the decision to drop the proposals, as all the residents had not yet been briefed.
The full version of this story appears in the February 18 edition of the Littlehampton Gazette.
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