Bryony Nierop-Reading's home went over the cliff at Happisburgh in Norfolk in the 2013 winter tidal surge.
The local council said she could not live in her caravan instead, but the Planning Inspectorate ruled she can stay until other arrangements are made.
Ms Nierop-Reading, 71, said it was a "very, very fair decision".
The former teacher moved to her 1930s bungalow on Beach Road in the erosion-hit village in 2008.
As the cliff-face disappeared, all her neighbours moved out two years later after accepting compensation from North Norfolk District Council.
Believing she would enjoy another 20 or so years of spectacular sea views, she declined.
But a few harsh winters, along with a clear-up of the ageing sea defences on the beach, left her home teetering on the edge within five years.
Following the events of the tidal surge in 2013 she moved to her caravan on her adjacent field.
However, the council issued an eviction notice saying she could not live in it long-term unless she got planning permission - which was unlikely given its proximity to the sea.
The notice was appealed and the Planning Inspectorate has now ruled the council was not wrong to issue it, but it should increase its grace period from six to 12 months to give Ms Nierop-Reading more time to make permanent living arrangements.
She now has until the end of next year to vacate.
She said the first option was for her daughter and son-in-law, who are tenants in her Witton Heath home three miles inland, to buy it from her, giving her money for another house in Happisburgh.
But failing that she said she had "a number of other options".
Ms Nierop-Reading said she believed common sense had prevailed, but "only because the inspectorate forced it".
"I am beginning to come to terms with it all and I can now think about the bungalow and some very happy times we had there," she said.
Judy Oliver, North Norfolk District Council's cabinet member for legal services, said: "The planning inspector dismissed the appeal on three of four grounds.
"On the fourth, the period of compliance was extended from six to 12 months. It's important to note that although the enforcement notice has been varied in this way, it has also been upheld.
"We thank the inspector for his decision."

Igors Zunda, 33, died when Jurijs Zunda collided with a lorry on the A43 in Northamptonshire in 2012.
Igors's son, who was two years old, was confined to a wheelchair as a result of the crash, the High Court heard.
The undisclosed settlement for Igors' widow Marina Kruglova, 30, is to be paid by the Motor Insurers' Bureau.
The bureau is the body which compensates victims of uninsured motorists.
The Mazda 5 car, which had four passengers, collided with a DAF lorry at Duddington near Corby on 4 December 2012.
Another passenger, Jevgenijs Draguns was also killed, while Julija Vonfelfende was injured.
Jurijs Zunda was jailed for 18 months in 2013 after pleading guilty to a charge of causing death by driving while unlicensed, disqualified or uninsured and he has since returned to Latvia.
The terms of the settlement were not revealed in court.
Interim compensation payments had already been paid to allow Ms Kruglova to adapt her home for her son, who is now five years old.
She was living in Lincoln, but is now in Glenfield, Leicester.
Judge Gary Burrell QC expressed  his "admiration for her ability to come to terms with what has happened and to strive forward".

He was getting on the Sunmi on the River Thames at Gravesend Reach in Kent at about 18:10 BST on Wednesday when it happened, the PLA said.
Emergency services were called but were unable to save him, the authority said.
PLA chief executive Robin Mortimer said: "Our deepest condolences are with our colleague's family and friends at this very difficult time."
He added: ""We have been in touch with the family and are offering whatever support we can."
No details of the nature of the accident have been revealed by the PLA.
The authority and the Marine Accident Investigation Branch have started an investigation into the accident and will be attending the PLA's Gravesend base on Thursday.
A woman who lost her bungalow to the sea and faced being evicted from a temporary home on her land has been allowed to stay put for another year.
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