The tree, in Featherbed Lane, Harlescott, and thought to be 150 years old, was just hours away from being chopped down to make way for new access to a school when the demonstration was staged on Monday, forcing contractors to call off the chainsaws.
One protestor scaled the tree as part of the demonstration.
The removal was scheduled as part of the expansion of Harlescott Junior School, where work has been ongoing since planning permission was granted in January.
Shropshire Council says that, following a further assessment of an oak tree on Featherbed Lane, the council is working on a revision to the scheme that would modify the school entrance in order to retain the tree.
A council spokesman said: "Following further arboricultural advice, some work will be required to try to improve the life and health of the tree. This may include reducing the crown of the tree to help stimulate internal growth. Work will be undertaken by the council at the appropriate time and will take into account any nesting bird activity."
The spokesman said that the tree was one of several identified for removal in the planning application and supporting documents and for which planning approval was given to make way for the substantial work required for the new school in Harlescott.
The school was a vital and major investment project to help to secure sustainable provision of primary and secondary education in the north of Shrewsbury and surrounding areas, he added.
A wider landscaping scheme, which will include the planting of a number of replacement and additional trees, is planned as part of the overall works of the new school.