Published Wednesday, 25 January 2012
The Ulster Council had ruled that it could not back the city's bid due to the ongoing dissident terror campaign - however that decision has now been reversed.
It was agreed by the council on Tuesday night that Derry can go forward as a contender to the meeting of its Ard Comhairle in Dublin on Saturday, where a final decision is expected to be made by secret ballot.
Peter Robinson and Martin McGuinness have welcomed the turnaround.
DUP leader Mr Robinson said: "I am pleased that whatever concerns may have existed surrounding the hosting of this event have now been addressed and that common sense has prevailed.
"The hosting of the event would be of both cultural and economic benefit to Londonderry and to, indeed, the wider district and I wish the bid every success on Saturday."
Sinn Féin's Martin McGuinness said: "This is a very positive development.
"I've no doubt that a strong case will be put forward and I sincerely hope that we will have further cause for celebration this weekend."
The Derry branch of Comhaltas Ceoltóirí Éireann, who organise the All Ireland Fleadh, appealed the ban, which it claimed was made without sufficient information.
On Wednesday, Brendan Molloy from the organisation said: "We very much welcome that and look forward to their support further in the Fleadh bid."
The endorsement by the Ulster Council means Derry's proposal will now compete with Sligo and Ennis for the final decision.
"We're delighted with the news, this is an amazing festival," added Mr Molloy.
If the Fleadh is held in the city, this would be the first time it is hosted in Northern Ireland and it would coincide with Derry's title of UK City of Culture 2013.
SDLP MP for Foyle Mark Durkan wished the city well for the final choice of Fleadh host destination.
He said: "We look forward to that excellent bid going forward on its merits to be duly considered by Comhaltas alongside the other worthy bids.
"I want to again reassure the broad membership of Comhaltas that the strong Derry bid recognises their ownership of this single cultural event and promises a partnership that is sensitive to all their purposes and requirements."
It is believed the 10-day event could attract 300,000 people to the north west and could generate upwards of £40m.