At least one major shareholder - poker player Tony Bloom, who owns 15 per cent of the club - had argued that McGhee should be sacked.
But chairman Dick Knight told the club website: "Mark has got clubs - including ourselves - promoted from League One before and is being given every chance to do so again.
"For the good of the club, I am very pleased that agreement has been reached.
"We are shaping up to the realities of life outside the Championship. Mark and his staff are fully aware of the challenge ahead."