Police said there is 'no vendetta' but only a need to 'protect the public' in their attempt to revoke the licence of a Sheffield nightclub.
Owners of Niche on Walker Street close to the Wicker, were told they must improve security measures following a Sheffield Council licensing hearing at Sheffield Town Hall.
Huge cheers from supporters could be heard from the public gallery as the licensing chair, Coun David Barker announced the decision.
The hearing was told four people were stabbed and another suffered broken bones following in what police called a 'gang' related attack on December 23. The altercation inside the club was said to have spilled out onto the street outside.
South Yorkshire Police had called for a revocation order of the club's licence but that was rejected by the committee.
The force stressed that no one from the club called the police and the first time officers heard about the incident was when paramedics called it in.
Barrister Aaron Moss, on behalf of South Yorkshire Police said: "Our headline point is that Niche should've called the police and didn't. The ambulance service called us at 4.49am and we were on the scene one minute later. Had we been their earlier, officers would've had a chance to prevent the attack.
"Whether or not they recognise their error, that error cannot be excused because it is indictive of the management and the doorstaff having no control of the venue.
"It's clear from conversations we've had between all parties that we are willing to engage to seek alternatives - the issue however is the police do not see any conditions will meet the risk.
"Despite Niche having extensive security arrangements in place - the stabbings still occurred.
"We're not here as part of a vendetta, we are not here to prove anyone right, we are not here to get our scalp, we are here to protect the public and to prevent crime and disorder.
"We are not satisfied that Niche will self impose appropriate conditions and if they do, we are not satisfied they will be able to enforce them."
The club must increase the number of door staff from four to six and limit the sale of glass bottles inside the club.
Niche will have until February 24 to present how they will do this.
There were jubilant scenes outside Sheffield Town Hall as the club's owners came out to meet supporters.
Speaking after the hearing club spokesman David Blythen said: "Everyone here has played a part - I'm quite emotional about it it's just amazing the club has been allowed to stay open.
"For the clubbers, it means so, so much. It's hard to explain and I just want to thank the council for considering everything - I think they've made the right decision.
"We don't want violent people in the Niche nightclub - that is so important just like any premises in Sheffield we do not want them in the club. We are peaceful people we enjoy the night in Niche and that's the way we want it to go on."
During the hearing, legal counsel on behalf of South Yorkshire Police called for the club to be stripped of its licence.
Barrister Leo Charalambides, on behalf of Niche said he had 'never seen such an outpouring of passion' for a club and described the venue as a 'city institution' which was 'ingrained' in Sheffield culture.
He told the committee he had received 45 official letters of support ranging from a victim of domestic violence to a double amputee army veteran who served in Afghanistan.
"I've never seen such support. A huge variety of people have described the club as a family and a place where they feel safe.
"This is a club who have invested heavily in CCTV and it's the reason why the police have made such good progress with their case because Niche has been so forthright with officers.
"The incident itself was completely random and out of the blue. They are willing to comply with any conditions."
Niche has remained shut since December 23, after a closure order was granted at Sheffield Magistrates' Court.
The club's management has previously claimed a permanent closure would be a 'clear attack' on the nightclub based on the reputation of its name and not its new venue, which opened around a year ago.
The original Sydney Street venue closed in 2005 following a drugs raid and a series of attacks.