LGBTI group Community Action for Rainbow Rights planned to protest directly outside St Mary's Cathedral in Sydney to coincide with Thursday's funeral mass.
However, NSW Police Commissioner Karen Webb filed an urgent application to block the protest.
Ms Webb's barrister Sebastian De Brennan told the Supreme Court on Wednesday the commissioner did not seek to stop the protest going ahead.
"It is simply that the proposed route, on our case, causes problems in terms of public safety," he said.
Tahn O'Rourke, acting for the organisers, said there was scope for further discussions to address concerns about protesters on College Street, which runs between St Mary's and the eastern side of Hyde Park.
The parties were given time to discuss and agreed protesters would be allowed to walk up to College Street, but not down it, Mr De Brennan said.
He said Justice Peter Garling would not be asked to make any order as the parties had come to an agreement.
"The matter has been resolved," he said.
Mr De Brennan also sought leave to file a notice to discontinue the application electronically which was consented to.
Justice Garling praised the parties for their handling of the application.
"I would like to thank the parties and the lawyers for resolving something that arouses no doubt great passions," he said before leaving the bench on Wednesday afternoon.
Cardinal Pell died in January and was given a traditional funeral at St Peter's Basilica in the Vatican.
His body is lying in state at St Mary's Cathedral on Wednesday ahead of a requiem mass and the associated protest on Thursday.
Clerical abuse survivors and their supporters have attached ribbons to the cathedral's fence, before some were cut off by security guards.
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