Rose, who has excelled in the north-east since his temporary move from Spurs at the start of the season, had a clause in his loan contract that ensured he must be recalled by Andre Villas-Boas by January 17th, in order to give Sunderland ample time to find a replacement.
Villas-Boas however, despite having recently stated that it will be "impossible" for the Black Cats to sign Rose on a permanent deal, has chosen not to recall the youngster to White Hart Lane.
Speaking to the Sunderland Echo, O'Neill detailed the intricacies of the deal:
The loan deal contained an option for Spurs to recall Danny this month, but they had to exercise that option by January 17.
I'm pleased to say they haven't done so, so he will be with us for the rest of the season and that is really good news.
Rose has endured a spell on the sidelines recently, but O'Neill has outlined that his return to the side may not be too far away, with him expecting Rose to return to training in the next week or so.
Villas-Boas' words last month about the unlikelihood of a permanent deal were a blow on Wearside, but Sunderland are unlikely to have given up their chase for Rose.
Spurs this month announced the signing for £3m of Zeki Fryers, a left-back from Standard Liege, and Rose himself has iterated his desire to make his move to Sunderland a one that will extend beyond the current season.