Father Bob Maguire will continue on as parish priest at South Melbourne until February 2012 after reaching a compromise agreement with the Catholic Archbishop of Melbourne, Denis Hart.

Father Bob, as he is widely known, has told AAP he will hand over the financial side of running the parish in return for staying on past his 75th birthday, which he celebrated earlier this month.

Under canon law, priests have to tender their resignation when they reach 75.

"We've signed an agreement where [Archbishop Hart] runs the place, and that's all right according to my suits," Father Bob said, referring to his lawyer.

With his lawyer by his side, Father Bob thanked the media and spoke of his victory in military terms.

"I'm an old digger and I salute the Archbishop as a senior officer, and he acknowledges my competence as the unit commander," he said.

Archbishop Hart agreed it was a good outcome.

"It's a win-win; Bob is going to do well what he does until he retires on the first of February 2012," he said.

A lawyer had hammered out the compromise after Father Bob refused to resign and garnered huge support from the Australian public.

"I'm just glad that I'm still the parish priest and South Melbourne can continue our work as another face of Catholicism," he said.

"I've agreed to resign in February 2012 but whether the public will want that, I don't know."

Archbishop Hart had accused Father Bob of financial mismanagement by selling off church property to fund his charities.

But Father Bob countered by saying the archbishop had to give final approval for any sale.

"I'll have to find money from other sources to make sure disadvantaged people don't suffer," Father Bob said.

The priest, who has headed the South Melbourne parish for 36 years, is well known for his charities and helping feed the homeless in the inner city district.

He appears on triple j's weekly radio program Sunday Night Safran alongside John Safran.

- ABC/AAP