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Sam Wijerathne and Dinesha Amarasinghe, who have three young sons, had been living in Queenstown for eight years when Dinesha's application for a work visa renewal was declined due to health issues.
At that time their residency application, submitted in 2013, was put on hold.
In February they won a 12-month stay, on humanitarian grounds.
This morning Clutha-Southland MP Hamish Walker, who has been supporting the family and organised a protest march last November attended by more than 400 people, announced the much-loved family would be allowed to stay permanently.
"The protest march late last year was the first of its kind in New Zealand,” Mr Walker said.
"The people of Queenstown rallied together and marched because they value Sam and Dinesha and their contributions towards the well-being and vibrancy of their community.
"This ordeal has been an unbelievable, emotional rollercoaster for the family and those who have stuck by them.
"This news will enable Sam, Dinesha and their three boys to go about their life in New Zealand with certainty.”
Mr Walker thanked the Queenstown community for their support of the family, which has "finally paid off".
“This is not only a win for the family but for the Queenstown community.”