Demonstrators have this week massed outside the Guangzhou offices of the Southern Weekly, a popular liberal paper which had an article urging greater rights protection replaced with one praising the ruling party.
Reports on Wednesday said that negotiations between government officials and the newspaper had reached an agreement that would see the journalists produce the next edition, due out on Thursday.
The South China Morning Post said the province's Communist chief, a rising star in the party, had stepped in to mediate in the rare public dispute which is testing the new party leadership under Xi Jinping, installed in November.
"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 protestors 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 on Monday the demonstrations drew hundreds of demonstrators, in a rare public challenge to the authorities on rights issues.
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 limits 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.
"The media cannot directly attack the nation's basic political system, because the basic political system is set out by the Constitution," it said.
According to the US-based website China Digital Times, the 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 that Dai Zigeng, the publisher of the Beijing News which is known for its investigative reporting, resigned after the paper was forced to print the Global Times editorial.
"Mr Dai is still at work as usual," said the official who declined to be named.
The censored Southern Weekly article was titled "China's Dream, the Dream of Constitutionalism," and called on authorities to implement the country's constitution, which enshrines rights including freedom of speech and assembly.
All Chinese media organisations are subject to instructions from government propaganda departments, which often suppress news seen as "negative" by the ruling Communist Party, although some publications take a more critical stance.
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