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State-owned timber company VicForests has agreed to extend its moratorium on logging in certain areas of East Gippsland.
An environment group is suing the timber company and the Victorian Government, over the logging of old-growth forest that is home to endangered owls.
After further legal wrangling, VicForests has agreed to halt any logging of the 81 coupes in question until February 27.
David Walsh from VicForests said legal discussions between the parties were continuing.
"The owl management areas are set up by the Department of Environment and Primary Industries and they're basically what is at the heart of its case," he said.
"For us we aren't involved in actually setting up those owl management areas but we will modify our operations ... [if the] department determines they need to be amended and further area set aside for habitat."
Environment East Gippsland's Jill Redwood said the endangered owls must be protected.
Ms Redwood said VicForests plan to log some of the owls' last remaining habitat.
"That we've identified as fairly important for the survival of owls in East Gippsland, so that's a really good thing," she said.
"Meanwhile, we'll be exchanging papers and evidence and arguments and see what happens in the New Year."