King's says in a statement that David Ganz will become emeritus professor of palaeography. Originally, the college proposed to drop the study of ancient writing entirely as part of plans to save ? million across the institution.
But after criticism from international scholars, it decided to scrap the current post - the only palaeography chair in the UK - and establish a new chair in "palaeography and manuscript studies" from 2012.
Despite the U-turn on palaeography as a discipline, King's remained determined that Professor Ganz should move on.
The college's latest statement praises his record as "an erudite scholar of early medieval scripts and manuscripts".
King's "will be able to carry forward studies in the discipline which he has worked tirelessly to protect", it adds. But it goes on: "With the emergence of new disciplines such as digital humanities, history of the book and manuscript studies, (palaeography) is changing and developing a wider remit."
The question of how the college will raise the money for the new chair, to be funded entirely through "philanthropic monies", remains unclear.
The old chair was funded through interest on grants from the Wolfson Foundation and on support for "minority subjects" from the Higher Education Funding Council for England.
A fund of ?967,154 produced interest (at a rate of 3 per cent) of ?29,015 in the most recent financial year, the report of the King's Palaeography Working Group notes.
This was a shortfall of ?50,000 on the full costs of the chair, with "slightly more than half" of the shortfall offset by research income from Hefce.
At 3 per cent interest, an endowment of about ?2.7 million would have been needed to fully fund the old chair.
Times Higher Education asked King's whether the previous funding would contribute to the new chair, or whether it would have to raise the entire endowment afresh. The college did not respond.