George Bell's name is to be reinstated at a Chichester Cathedral centre for vocation, education and reconciliation - three issues that were close to the late bishop's heart.
His name was removed from the building in 2016, a year after sexual abuse allegations against him were made public.
The claims were later deemed to be "unfounded" by an independent inquiry and the Church of England apologised for its handling of the allegations.
Chichester Cathedral said the decision to remove Bishop Bell's name and re-designate the centre as 4 Canon Lane was "motivated by a desire to do the right thing by the complainant".
"The decision was made in good faith under deeply sensitive circumstances. However, the Chapter acknowledges that this decision was deficient and apologises for this," it said.
4 Canon Lane is a beautiful former archdeaconry built in the late 19th century and situated within the historic Cathedral Close.
In 2008, it was gifted to the cathedral in memory of Bishop Bell by the Sisters of the Community of the Servants of the Cross.
It primarily acts as a centre for vocation, education and reconciliation - three issues that were close to Bishop Bell's heart, but it also provides guest house accommodation to visitors to Chichester.
4 Canon Lane will now become George Bell House. The cathedral said that the title of 4 Canon Lane will continue to be used for some commercial activities.
