The KNVB’s licensing committee had recommended the club be relegated one division for failing to get its finances in order and earlier this week a court ruled this would not be illegal.
But the KNVB’s appeal committee has overturned the ruling, arguing that the club had met its obligations to disclose all financial irregularities by May.
In addition, the licensing committee should not have held new revelations made about the period December 2015 to April 2016 against the club, the appeal committee said.
Twente’s board had said the club could go bankrupt if the demotion went ahead.
The KNVB ruling is a bitter blow for De Graafschap which will now be relegated to the first division after all.