"The newspaper will publish as normal on Thursday," the reporter at Southern Weekly, who declined to be named, told AFP after reports said staff had reached an agreement with the authorities.
The row at the popular liberal paper, which had an article urging greater rights protection replaced with one praising the ruling party, has seen demonstrators mass outside its headquarters in the southern city of Guangzhou.
The affair is seen as a test for the new Communist Party leadership under Xi Jinping.
"It was a case of internal politics," the reporter said. "I am writing an article as we speak, it's about Alexis de Tocqueville's The old Regime and the Revolution, referring to the French thinker's analysis of the 1789 Revolution.
The South China Morning Post said Guangdong province's communist chief Hu Chunhua, a rising star in the party, had stepped in to mediate in the row.
"There's a verbal agreement in place. Basically it's back to normal, but we'll see how the two sides react to each other in the future," Dow Jones Newswires quoted a Southern Weekly editor as saying.
Under the deal, journalists involved in the protests would not be punished and propaganda authorities would no longer directly interfere in content before publication, Dow Jones said.
A handful of protesters gathered outside the Southern Weekly's offices Wednesday, one of them in a wheelchair, holding banners calling for press freedom which police tried but failed to seize.
At their peak Monday the demonstrations drew hundreds of people in a rare public challenge to the authorities on issues of press freedom.
As the campaign swelled, backed by support from the blogosphere and celebrities on social media, the state-run Global Times produced a hard-hitting editorial Wednesday called for restrictions on media liberties.
"Freedom of the press must have limits. It should correspond to social demands, but also provide more than that," said the daily which is known for its outspoken nationalistic views.
Call to implement the constitution
"The media cannot directly attack the nation's basic political system, because the basic political system is set out by the Constitution," it said.
The censored Southern Weekly article was titled "China's Dream, the Dream of Constitutionalism", and called on authorities to implement the constitution, which enshrines rights including freedom of speech and assembly.
The document includes a preamble which says that Chinese people will adhere to China's political system "under the leadership of the Communist Party of China".
According to the US-based website China Digital Times, Chinese media have been instructed to reprint prominently an earlier Global Times editorial on the issue.
Beijing's propaganda department denied reports that the campaign was spreading with the resignation of another major publisher over the directive.
Media and online posts said Dai Zigeng, the publisher of the Beijing News which is known for its investigative reporting, resigned after the paper was forced to print the earlier editorial.
"Mr Dai is still at work as usual," said a propaganda official who declined to be named.
All Chinese media organisations receive instructions from government propaganda departments, which act to suppress news seen as "negative" by the ruling Communist Party, although some publications take a more critical stance.
The censorship of Southern Weekly, which involved the insertion of an article written by a propaganda official, was seen as an unusually direct expression of government control over one of China's most outspoken newspapers.
China came 174th in a list of 179 countries ranked for press freedom in 2011-12 by the advocacy group Reporters Without Borders, falling three places compared to the previous year. – Sapa-AFP