Health chiefs are to meet campaigners fighting to save a village hospital after both sides agreed to take part in mediation.
Cranleigh Village Hospital Trust (CVHT) had begun legal action to seek a judicial review over a decision by NHS Surrey to close all 14 in-patient beds.
NHS Surrey said it recognised mediation as a way of resolving issues as an alternative to legal redress.
A spokeswoman for CVHT said legal action would continue during mediation.
She added that hospital campaigners had wanted mediation from the outset.
She said: "CVHT is relieved that NHS Surrey has finally agreed to mediation and bitterly regrets that CVHT was forced to incur the costs and inconvenience of a legal process to achieve this.
"CVHT now hopes the experienced mediator appointed will be able to achieve an outcome satisfactory to all the parties."
'Best health care'
Ann Sutton, interim chief executive of NHS Surrey, said: "I would like to confirm that we have agreed to mediation with Cranleigh Village Hospital Trust.
"While this process takes place, I would like to reassure the public that we remain focused on ensuring patients continue to receive the very best health care in terms of quality and safety from current facilities."
NHS Surrey wants to use Cranleigh Village Hospital to provide specialist rehabilitation services for elderly people.
Under the trust's £8m redevelopment plans, the site would provide no in-patient care but would instead offer outpatient services, clinics and home visits. It would also fund up to eight beds in nursing homes in the area.
CVHT wants to turn the site into a modern hospital with both NHS and nursing home beds.