Miss California USA and Miss USA runner-up Carrie Prejean will remain Miss California USA.
Donald Trump made the announcement Tuesday in New York.
The announcement came one day after Miss California USA Pageant officials held a news conference at The Peninsula hotel in Beverly Hills Monday morning to discuss the "many issues surrounding Miss California USA."
The participants in the Beauty Queen Summit were first runner-up to Miss California USA, a.k.a. Miss Malibu, Tami Farrell, along with current Miss California Teen USA Chelsea Gilligan, and pageant co-directors Keith Lewis and Shanna Moakler, who was Miss USA in 1995.
Lewis and Moakler said the main problem is that they have not been able to get in touch with Prejean.
"Up to now, it's very difficult to get in touch with Carrie," said Moakler. "It's making our job very difficult.
"We're tried numerous times. There are numerous handlers and PR people that won't allow it."
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On Tuesday, Trump characterized the issue as "miscommunication."
"They are really getting along very well," Trump said of Prejean, Moakler and Lewis. "They've been meeting for hours in my office. They've developed a relationship they didn't have before."
Prejean, who was chosen Miss Congeniality by her fellow contestants before the brouhaha, said the meeting was productive.
"We're all just able to move on," Prejean said, seated next to Trump at Tuesday's news conference. "I'm ready to be the best Miss USA California that I can be."
California pageant organizers announced Monday that Farrell will fulfill at least some of her duties under the title of Beauty of California Ambassador. The move was made because Prejean has neglected her duties as the title-holder, said Lewis.
"Up until now, we have just been riding along pretty much as a passenger on this runaway train. As of today, that ends," Lewis said Monday.
Lewis said Prejean has already missed scheduled appearances.
"The contract outlines that she must be available to us," Lewis said.
Moakler and Lewis said they compiled information for Trump, who owns the Miss USA pageant, to consider.
"We are owned by Miss Universe," Moakler said. "We can bring this to Mr. Trump and say, 'This is what we feel.' At the end of the day, Miss Universe does have the final say."
Prejean, 21, raised the ire of Miss USA judge Perez Hilton, who is gay, when she responded to his question about gay marriage by saying people in America have the right to choose whether they support same-sex marriage, but that she is personally opposed.
Hilton and another judge said they gave her a low score for her answer during the interview portion of the pageant, possibly costing her the title, and Hilton blasted her on his website, calling her a "stupid bitch."
Prejean, a junior at San Diego Christian College in El Cajon, did not apologize for her answer and further incensed Hilton and pageant officials when she agreed to become a spokeswoman for groups opposing same-sex marriage.
"Another prominent issue is that no one knows the difference between the comments, endorsements and activities of Carrie Prejean, and those of the Miss California USA title," Moakler said. "That is why her contract forbid such activities without our written consent.
"In spite of that, she has recorded a telephone message calling for donations and signatures to protect marriage. We have never asked her to apologize or recant her opinions or beliefs. Carrie has been unavailable... because of her commitments to outside organizations."
Since the pageant, semi-nude photos of Prejean were posted on a website; it was revealed she got breast implants, paid for by the Miss California USA organization; details about her parents' divorce, including claims of homosexuality, were leaked; and California USA pageant officials said she may have violated her contract, which requires contestants to avoid controversy and not appear in nude photos.
In the photos, Prejean is standing sideways covering her breasts with her arm, revealing less of her than could be seen during the swimsuit portion of the televised Miss USA competition.
"For us, it's not the content that's upsetting, it's that it wasn't given to us to consider," Lewis said of the pictures.
"The turning point was when she wanted to move forward with media interviews when her message was dividing us. We never want to take away a belief or voice. We want to encourage it. We try to make them capable of being free thinkers. You can't polarize the people you represent. The turning point was when she said, I'm not speaking for you anymore, I'm speaking for me."
Through her lawyer, Prejean has asked that the operators of the website remove the photos, which were posted without her knowledge or permission, and tell where they got them, but so far they have refused both requests.
While some have defended her right to free speech, others, such as the celebrity gossip Web site TMZ.com, have continued to belittle her with such headlines as "Who's the Boob Now" on a story about the photos, and "Phone Whore" over a story about her recording a telephone message opposing gay marriage for the National Organization for Marriage.
