SANTA ANA, Calif.—An Orange County neighborhood that was ordered to take down its elaborate Christmas light display has won a dazzling victory.

Residents of the Wagon Wheel area of Trabuco Canyon had a Wednesday deadline to remove lights that stretch on steel cables across the street between some 20 homes.

The county said the lights encroached on the public roadway and could pose a fire hazard. Homeowners were warned that unless the lights were removed, they could face misdemeanor charges and fines of up to $500 per day.

But after the threat made the news, the county switched course.

The Orange County Register ( http://bit.ly/1hzcEQT) says residents were told Tuesday that the lights can stay if they submit permit applications and the installations pass inspections. The county's even waiving the permit fee.