The Chapter of St Paul's Cathedral has unanimously agreed to suspend its legal action against the protesters camped outside, it announced today.
The cathedral said it had taken time to reassess the situation following the resignation the Dean, the Right Reverend Graeme Knowles, and had a meeting with the Bishop of London, Dr Richard Chartres.
Dr Chartres said: "The alarm bells are ringing all over the world. St Paul's has now heard that call.
"Today's decision means that the doors are most emphatically open to engage with matters concerning not only those encamped around the cathedral but millions of others in this country and around the globe."
Members of the Chapter met representatives from the protest camp this morning in a bid to engage "directly and constructively with both the protesters and the moral and ethical issues they wish to address, without the threat of forcible eviction hanging over both the camp and the church", a spokesman for the cathedral said.
The Bishop has invited investment banker Ken Costa, formerly chairman of UBS Europe and chairman of Lazard International, to spearhead an initiative which aims to reconnect the financial with the ethical.
Mr Costa will be supported by a number of City, Church and public figures, including Dr Giles Fraser, who resigned as the chancellor of St Paul's Cathedral last week.
The Right Reverend Michael Colclough, Canon Pastor of St Paul's Cathedral and a member of Chapter, said: "This has been an enormously difficult time for the cathedral but the Chapter is unanimous in its desire to engage constructively with the protest and the serious issues that have been raised, without the threat of legal action hanging over us.
"Legal concerns have been at the forefront in recent weeks but now is the time for the moral, the spiritual and the theological to come to the fore."
However, the City of London Corporation intends to continue with its plans to remove the anti-capitalist protesters and will take legal action if they refuse to go.
The corporation will hand over a letter to the group today warning them that they have 48 hours to clear the campsite or High Court action will be taken to secure their eviction.
The announcement by St Paul's was welcomed by protesters at the camp.
Spokesman Ronan McNern said: "It is really positive and we are very excited about hopefully great new beginnings."
Ciaron O'Reilly, 51, a worker with the homeless in London, said: "It is a great move from the Anglican Church and it is good to try to work with the movement instead of resisting it."
Eileen Finnan, 52, said: "I think it is great, because we are doing great things here and sending out an important message."
Sandra Quayle, 48, said: "It feels really special because it is from St Paul's and we are on holy ground."