Antic and Karadzic clashed after Serbia's early World Cup exit and what started as a honeymoon when Antic took over in 2008 will carry on as a marriage of convenience due to a lack of other candidates for the job.
"After protracted meetings and a lot of thinking, we decided to let Antic carry on in the Euro 2012 qualifiers despite many hard feelings sparked by an ugly conflict between the coach and the FSS," Karadzic told a news conference.
"Plenty of bitter words were said; it's hardly an ideal solution but Antic stays because we have been able to halve his income and he is still the best man for the job.
"The four-game touchline ban imposed on Antic by FIFA is a downside but we trust his judgment that his staff will be able to replace him fittingly in the opening four qualifiers."
Antic, who was reportedly earning 100,000 euros per month, was punished by FIFA for insulting the referee after Serbia's 2-1 World Cup defeat by Australia which sent them out of the competition in the group stage in South Africa.
His days as Serbia coach seemed to be numbered after he lambasted the FSS and refused to take a pay cut when they blamed him for the team's World Cup failure, but both parties made a U-turn as Euro 2012 qualifiers drew closer.
"We talked to several potential replacements during the feud but always had a compromise with Antic in mind," Karadzic said.
"Apart from the pay cut, the reason that swung the decision in Antic's favour was the fact that appointing a new coach with no inside knowledge of the team so close to the qualifiers would have been a huge risk.
"We were unhappy with Antic's arrogant behaviour after the World Cup but we now have to mend our relations with him because that's in the best interest of Serbian soccer.
"He has our full support and is not living on borrowed time; we would like to qualify for the Euro 2012 finals in Poland and Ukraine but Antic will stay in charge throughout the campaign regardless of the result.
"Antic will get a bonus if we qualify but he has to earn it like he earned it when he steered us to the World Cup."
Serbia open their campaign in the Faroe Islands on Sept. 3 and are at home to Balkan rivals Slovenia four days later.
