Breaking news from Occupy London

St Paul's and Corporation of London halt legal action against Occupy camp

Cathedral announces U-turn and initiative to 'reconnect financial with the ethical' – but corporation qualifies its move as a 'pause'

the Guardian,

Tuesday 1 November 2011 18.51 GMT

Activists campaigning against financial inequality and banking excesses look set to remain camped outside St Paul's cathedral well into next year after both the church and the Corporation of London, which jointly own the land the protesters have occupied for more than two weeks, said they were halting moves to evict them.

While the corporation said it had merely "pressed the pause button" on its legal bid, St Paul's delighted the Occupy London movement with a statement that explicitly lined up the might of one of the Anglican congregation's most celebrated institutions behind their call for greater social justice.

"The alarm bells are ringing all over the world. St Paul's has now heard that call," said the Bishop of London, Richard Chartres, who was called in to help the cathedral change course after its dean, the Rt Rev Graeme Knowles, resigned on Monday following heavy criticism of the decision to close St Paul's for a week and cut off all contact with the protest camp.

In a statement that drew repeated cheers as protesters read it aloud at their daily assembly, Chartres said the doors of St Paul's were now instead "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".

The statement also announced plans for a new group, headed by Ken Costa, a former top investment banker, with the aim of "reconnecting the financial with the ethical". This will also involve Giles Fraser, the canon chancellor at St Paul's, who stepped down last week over concerns that the cathedral's support for eviction could see it complicit in eventual violence.

A spokesman for St Paul's said the governing chapter had decided to cease legal action and instead engage with activists within the camp of 200 or so tents, which was set up on the western edge of the cathedral 18 days ago. The Rt Rev Michael Colclough said legal advice had dictated that contact should be cut as long as court action remained a possibility, which was "frustrating" for the cathedral.

He and other officials met camp representatives on Monday evening and agreed that the two sides should instead work together. "I believe we had a very useful beginning to what must be an ongoing dialogue," he said. "This is not a PR stunt, it is a breakthrough in Christian dialogue."

While the cathedral chapter had sympathy for the activists' broad message, they hoped to be "a bridge-builder" between the camp and the City, rather than an ally, Colclough said: "We have not jumped sides. I would say that we would not want to be 'on' sides … When it comes to their basic message of social justice, I would say that we were there before them."

The Corporation of London had been expected to serve legal papers on the camp on Tuesday morning, giving activists 48 hours to pack up their tents or face court action. But the cathedral's U-turn left them in a near-impossible position given that the protest site is part-owned by St Paul's, and that even a joint action was expected to last several months.

Following the cathedral's announcement, Stuart Fraser, the corporation's policy head, said it had briefly suspended its own legal plans to allow "time for reflection". He added: "We're hoping to use a pause – probably of days not weeks – to work out a measured solution."

What the solution will entail will most likely come down to detailed talks between the camp and cathedral chapter. The activists, who make all decisions by consensus at mass meetings, have already voted to stay at the site until after Christmas. However, they say they are open to possibly reducing the size of the camp and are already discussing ways to limit their impact on the cathedral during upcoming peak periods such as Remembrance Sunday, Thanksgiving and Christmas.

Either way, activists were exultant after a day of high drama.

"It's a big victory for us. The mood in the camp is very happy," said one member of the camp, Spyro van Leemnen. "I think the church just realised that they stand for many of the same values we do. From day one we've said we want dialogue with them.

"The Corporation of London was the bigger surprise. We don't know whether they also changed their mind or just thought they couldn't go ahead with their legal action without St Paul's – either way, everyone is glad this bit of drama is over. Hopefully we can now start to focus on the main issue, which is social and economic inequality and the problems of the finance system."