Manx Care says it won't move a rehabilitation ward from Ramsey Cottage Hospital to a day centre more than half a mile away.
In a statement, the organisation says relocating Martin Ward to Reayrt Skyal on Gardners Lane was an option that had been considered.
It made the announcement after what it called the "accidental disclosure of confidential planning discussions".
Manx Care's board is due to consider options when it meets in July, but the Reayrt Skyal move has now been ruled out.
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