Donald Trump, who owns the Miss USA organization, has ruled that Carrie Prejean will retain her crown.
Prejean came under fire after she failed to reveal she had posed topless as a teenager, and made several appearances for a group that opposes gay marriage without permission from pageant officials.
Officials questioned whether she was "in accordance with the highest ethical and moral standards," as required by the 12-page document signed by all pageant contestants.
"It's the same answer the president of the United States gave; it's the same answer many people gave. She gave an honorable answer; she gave an answer from her heart. She has to be commended," Trump said referring to Prejean's controversial same-sex marriage answer at the Miss USA pageant.
"We've made a determination that everything we've seen to date that she's done - some were very beautiful, some were risque - but the pictures taken were acceptable, were fine, and in some cases were lovely pictures. We are in the 21st century."
After Trump spoke, the 21-year-old took her turn defending herself: "I cannot count the number of fan mail I have received in the past three weeks of people expressing their support to me. Most importantly, I would like to thank God for trusting me with this large task and giving me the strength to stand by my beliefs."
Prejean thought judge Perez Hilton asked her a "politically charged question with a hidden personal agenda." In an interview earlier this week, she referred to the question as a challenge from Satan.
"Being at the center of a media firestorm is not something I had planned or signed up for. Let me be clear, I am not an activist, nor do I have a personal agenda. I was thrown into this firestorm from the time I was asked the question on stage. The president of the United States, the secretary of state, and many Americans agree with me."
"I exercised my freedom of speech. And I was punished for doing so. I am not working for the National Organization for Marriage. I spent about an hour with them. I am not going to be speaking out against same-sex marriage. I'm going to resume my duties as Miss California, but also stay true to my personal beliefs. We will see how we will balance the two."