The over 30-hour protest outside Rail Bhavan in the high-security Raisina Hill area that virtually morphed into a demand for control over Delhi police and threatened to disrupt the Republic Day celebrations on Sunday ended following an assurance from the Lt Governor Najeeb Jung.
Kejriwal, who had slept last night on the road and held cabinet meetings with his colleagues in his car, announced that he was calling off the protest following the "victory" achieved by the people of Delhi.
Earlier in the day, he ruled out any negotiations and threatened to flood the Rajpath with his supporters for disrupting the R-Day celebrations.
Under the compromise, the SHO of Malviya Nagar, who refused to raid an alleged drug and prostitution ring on the orders of Law Minister Somnath Bharti, and PCR van in-charge of Paharganj, where a Danish women was gangraped last week, were sent on leave, paving the way for an end to the confrontation with the Centre.
Appealing to Kejriwal to withdraw his agitation, the Lt Governor said the judicial inquiry into the alleged police inaction would be expedited.
The compromise meets only half-way Kejriwal's demand that five officials be suspended in connection with these two incidents apart from burning of a girl allegedly by her in-laws.
Kejriwal read out from the letter of Jung who appealed to him to call off the agitation "in view of the sacrosanct occasion of the Republic Day and the perceived security situation".
The Chief Minister claimed that the police have arrested the culprits in the case of a rape of woman, which was also one of his demands that triggered the agitation.
With Home Minister Sushilkumar Shinde, who bore the brunt of their personal attacks, rejecting their demand for action against police officials, Arvind Kejriwal scaled down the demand to transferring them.
The first indications of a possible breakthrough came when a senior AAP leader had a telephonic talk with the Lt Governor and the contours of an agreement surfaced.
Immediately, top AAP leaders comprising the Political Affairs Committee met at the nearby press club to work out the way to end the stalemate.
After the hour-long meeting, Arvind Kejriwal returned to the dharna site and addressed his supporters before calling off the protest.
In his speech, he said when the Lt Governor ordered a judicial inquiry into their demands he wondered how a fair probe will take place if the officials were in their posts.
He told his cheering supporters, who had earlier fought with police leading to injuries on both sides and the media, that it was a "victory" for the people of Delhi.
The Chief Minister said his party would continue to rake up issues of women's safety whenever they are threatened. "We had said that the security of women is of utmost importance to us."
This is the first time, he said, when a Chief Minister and his entire cabinet had to take to the streets. "Why was this needed. Because the previous government used to say that police was not under them whenever such incidents happened in the past."
Arvind Kejriwal said Delhi government was not "helpless" and the struggle for protection of women will continue.
Earlier in the morning, Arvind Kejriwal told reporters that action should be taken against policemen.
"The people protesting here are not Pakistanis or Americans. They are our own people. Shinde is saying that we will we will celebrate Republic Day but for whom The VIPs will watch the floats and parades. That is not Republic Day.
"We will continue our protest. How can Home Minister (Sushilkumar) Shinde sleep when so many crimes are happening in Delhi When women are unsafe in the city We won't negotiate," Arvind Kejriwal said.
Attacking Shinde for ruling out action against police officials who refused to raid the alleged drug and prostitution ring, he said, "I would urge him not to back his men but back the people of India.
"The lower level police officials are with us. A man resigned and came to join us. He had tears in his eyes.
Another man who was shouting slogans in our favour has been suspended. There will be a rebellion in Delhi Police too," Arvind Kejriwal claimed.
He also questioned the Delhi Police advise to them to shift their protest to Jantar Mantar.
"I am being told to sit at Jantar Mantar. I am the Chief Minister. I can sit wherever I want. Who are they to tell us what to do. He is not the Chief Minister of Delhi. Who is Shinde to say where the Chief Minister of Delhi will sit," the Chief Minister said.
Said to be having cold and running mild fever, Arvind Kejriwal was accompanied by his wife during the sit-in today.
Unlike yesterday, hundreds of AAP supporters thronged the venue of the dharna outside Rail Bhavan.
Along with his six cabinet colleagues and scores of supporters, the Chief Minister spent the night under the quilt on the road outside the Rail Bhavan, braving the cold winter.
Some of his supporters spent the night singing and raising slogans around a bonfire.
He objected to the Delhi Police ordering closure of some Metro stations close to the protest site.
"Shinde has closed the metro stations. I had told the metro officials to run the metro. They said they cannot do it as Delhi Police has closed it. Shinde is causing inconvenience not us. He has closed all of Delhi and metro. There are very few of our protestors here," he said.