Lilian Turner, 95, who faced deportation to Britain, where she had not lived since after the end of World War II, has been granted residence.
The widow's case comes as the Law Society and immigration lawyers say they are seeing an increasingly tough stance on deportations by Immigration New Zealand.
But the agency said while it was focused on immigrants with criminal convictions, and those who posed a threat to national security, it had no intention of deporting Mrs Turner.
The appeals tribunal decision brings to an end a 13-year battle for Mrs Turner to regain the residence status she had nearly 40 years ago.
Mrs Turner and her husband moved to New Zealand in the 1970s, but their permanent resident status lapsed when they moved back to Africa.
Her husband died and Mrs Turner left Zimbabwe after she was assaulted several times.
In one robbery in 1999, two armed men tied up the then 79-year-old with electric cable before looting her home.
But on returning to New Zealand in 2002, and after a series of visitor visas, she was refused residence because her New Zealand son, who is 64, did not meet the eligibility criteria to sponsor her to become a resident.
She also has a 70-year-old daughter in New Zealand.
The immigration and protection tribunal upheld her appeal against being deported, saying it was "hardly practical or reasonable" to return Mrs Turner, who lives in a care home and suffers from several medical conditions, to a country she left in her 20s.
The manager of the rest home where she lives said her cognitive impairment had deteriorated due to her age, and she required assistance with all aspects of daily living, as well as supervision of medication.
She had obsessive compulsive personality traits and any change in her environment would be detrimental to her mental health and physical well-being, she said.
The tribunal ruled she should not be deported and should instead be granted residence.
"The appellant's advanced age, her physical and mental infirmity, her inability to live independently, and her family connection to this country amount to exceptional humanitarian circumstances.
"To require the appellant in her current mentally and physically vulnerable state to uproot and return to the United Kingdom from where she emigrated in 1947 and where she has no family support would cause her such distress and suffering as to be unjust and unduly harsh."
But it did note her residential care was a significant cost to the public health system.
"However, in this case, the strength of the appellant's exceptional humanitarian circumstances and public interest in the compassionate and humane treatment of the vulnerable elderly take precedence over the public interest in containing the potential burden on the public health service."
But Immigration NZ assistant general manager Peter Elms told Morning Report Mrs Turner was never at the top of the deportation list.
"There's a lot of people in New Zealand who are unfortunately here without visas. What we do is we prioritise any deportation action based on the risk that the individual poses. I think it's fair to assume that Mrs Turner would not be high on that list of priorities. In all likelihood, she would have stayed in New Zealand without a visa."
In an earlier statement, area manager Michael Carley denied it had been intending to deport her, although he accepted she was liable for deportation.
He said: "Her application for a residence visa was declined in March 2011, because she did not meet the requirements under the then Parent Category.
"It is important to note that INZ does not have discretion to consider humanitarian factors in this decision - all applications must be assessed against the relevant immigration instructions."
Mrs Turner did not exercise her right to appeal against this decision and that made her status in the country unlawful, he said.
"As a result of a request to the minister, Mrs Turner was subsequently granted a further two year visitor visa as an exception to immigration instructions.
After that visa expired, Mrs Turner became automatically liable for deportation because she no longer held a current visa.
"She then exercised her right to appeal against her liability for deportation to the Immigration and Protection Tribunal."
He said she was "technically liable" for deportation, but Immigration New Zealand was fully aware of the circumstances of her case and had absolutely no intention to deport her.
Immigration New Zealand said it could not say whether she was the oldest person to have faced deportation.
Immigration lawyer Simon Laurent said Mrs Turner still had other avenues that were not picked up.
"She could have appealed that decision and pleaded special circumstances, but she didn't. She could have, with the right advice, have approached the Minister of Immigration for special direction in the last 13 years, but that never happened either."
Mr Laurent said Mrs Turner would not be eligible for benefits if she stayed without a visa.
