A NSW Supreme Court hearing was interrupted on Thursday afternoon with news of an agreement between the parties.
During discussions taking place in the background of the court proceedings, organisers agreed for the Sunday rally and CBD march to commence in Hyde Park instead of Town Hall.
One, Joshua Lees, told AAP outside the event would look very similar to what was already planned.
"We got what we wanted," he said.
Organisers are no longer seeking approval to hold an authorised protest on Monday, October 7, the anniversary of deadly attacks by Hamas on Israel, the court was told.
This followed a bid by police commissioner Karen Webb to halt both events, citing safety concerns given a recent expansion of conflict in the Middle East.
Police feared the Sunday action could become a "tinderbox" if the estimated thousands of attendees passed by Sydney's Great Synagogue.
However Justice Jeremy Kirk was told he was no longer required to decide whether the rally should be approved, with word it would commence at Hyde Park rather than Town Hall, with organisers estimating an attendance of roughly 5000 people.
Police assistant commissioner Peter McKenna earlier told the hearing there was a difference between police having the power to arrest or issue move-on notices and actually being able to if crowd numbers grew too great.
He said there was also the possibility some attendees could display Hezbollah flags, which are prohibited as symbols of a terrorist organisation.
Pro-Palestine supporters say their actions have been peaceful throughout the year. (Bianca De Marchi/AAP PHOTOS)
Recent rallies had taken on a more "aggressive" tone, following the expansion of hostilities into Lebanon, he added.
Of the proposed re-entry of protesters into Hyde Park passing the rear of the Great Synagogue, he said: "I think it would actually be quite provocative.
"It only takes one or two people to say the wrong thing and it could be a tinderbox."
Lawyer for the protesters, Arjun Chhabra pointed out the route past the synagogue had been discussed with police as recently as Tuesday.
Even if a small number of people were to display Hezbollah flags, to ban the march entirely would undermine the rights of the vast majority, he said.
Mr Lees told the hearing he believed the protest could be held peacefully and safely, citing similar events that had run smoothly over the past year.
"We don't want people to get into trouble with the law, we don't want that at our protests," he said.
Prior to Thursday's hearing, dozens of protesters gathered outside the court and demanded their right to protest be upheld.
Protesters gathered outside the NSW Supreme Court prior to Thursday's hearing. (Dan Himbrechts/AAP PHOTOS)
NSW has a permit system that allows participants to disobey laws against blocking transport routes but police can go to court to deny protest permission.
Victorian Premier Jacinta Allan has dismissed suggestions the same system would be effective in blocking similar events planned in Melbourne.
NSW Premier Chris Minns said the majority of Sydney's pro-Palestine rallies had been without incident but noted the first and most recent events involved serious breaches that could sow community discord.
Monday marks the one-year anniversary of the October 7 attack on Israel by Hamas, during which about 1200 people were massacred and 250 were taken hostage.
Israel's counter-attack in occupied Gaza has killed more than 41,000 people, according to Palestinian officials, with the majority of its more than two million residents facing starvation.
Foreign Affairs Minister Penny Wong said Monday marked the greatest loss of Jewish lives in a single day since the Holocaust and was not a time for protest.
"It's a day of grieving and a day of remembrance and should be honoured," she told reporters.
Federal Opposition Leader Peter Dutton said the weekend protests represented a "celebration of death" and should be stopped.
