Corrections Minister Judith Collins is still refusing to express direct confidence in Department of Corrections chief executive Barry Matthews.
State Services Commissioner Iain Rennie was asked by Ms Collins to look at who was accountable for the department's failings in managing offenders on parole, following a report by the Auditor-General.
In his report, Mr Rennie has told Ms Collins that improvements are being made by the department and dismissing Mr Matthews would not be justified.
The Minister refused to express confidence in Mr Matthews when failings of the department were identified in February.
On Monday, she said she must accept the commissioner's recommendations and can work with Mr Matthews.
However, when asked if she had confidence in him, Ms Collins would say only that she has confidence that Mr Matthews understands public safety is the main issue for the department.
"I have confidence that Mr Matthews understands that public safety is the number one issue for Corrections and that he is working on building a culture of excellence, accountability and professionalism."
As State Services Commissioner, Mr Rennie is Mr Matthews' employer and says he has confidence in him and no one should get the sack.
However, in order to keep that confidence, Mr Rennie says Mr Matthews will have to keep on improving the Corrections Department.
"I've been asked to fairly look at the performance of Corrections. I have found shortcomings, but I've also seen improvements. That's why I concluded that dismissal was not appropriate. But that's also why I think continued improved performance in this very important area to the public keeps on."
In a written statement on Monday, Mr Matthews said he would work to regain the Minister's confidence and to rebuild the public's trust in the department.
Mr Matthews said Mr Rennie's report accurately summarises the facts and sets out clear expectations on what he needs to do to improve the department's performance.
But Labour leader Phil Goff questioned how the relationship can be rebuilt between Ms Collins and Mr Matthews, saying the Minister has egg on her face.
"There is no case for his (Mr Matthew's) dismissal, yet his Minister has constantly undermined him over the last few weeks. It's very hard to see how a professional relationship can be restored."
Mr Goff says Ms Collins pre-judged the case.
Extra funding for parole likely - PM
Prime Minister John Key said on Monday the Government is likely to increase funding for parole and a request has been put to Finance Minister Bill English.
The State Services Commissioner's report recommended that the Government "give serious consideration to additional funding", following a similar finding in the Auditor-General's report.
Mr Key acknowledges there are funding issues, but says there must also be a culture change in the Corrections Department. He says Mr Matthews has begun that change.