A government-appointed expert panel will be overseeing Birmingham City Council until March next year at least.
The panel's stay in the city has been extended by Local Government Secretary Greg Clark.
Initially, the Birmingham Independent Improvement Panel was expected to be monitoring the city council's improvement until December - a year after the damning Kerslake report was published.
But now, in response to its latest report, Mr Clark has asked for an update in early January, just weeks after a new Labour council leader is appointed following the resignation of Sir Albert Bore.
It Means the council is still under close government scrutiny - but not yet thought to have reached the stage of a take over - although there is a warning that could happen if the panel or Mr Clark are unimpressed by the Birmingham Labour group's choice of next leader.
In his response, Mr Clark said: "Whilst you have indicated that some progress has been made, the significant risks you and your panel have outlined in relation to the slow progress in developing a city partnership and an agreed vision for the city, a long term financial strategy and in securing the senior management capability required for the size of the council are concerning.
"In the context of these concerns and the council's financial position, I am hereby extending the panel's oversight until the end of March 2016."
It means the panel will be watching carefully the setting of the 2016/17 budget and the continued improvement.
Meanwhile, Birmingham City Council's outgoing leader said he was pleased the Government-appointed watchdog panel had recognised progress made on improving council services.
The poor performance of the city council and direct criticism of the leadership earlier this year had been a major factor in the build up to the resignation of Labour council leader Sir Albert Bore last month.
But now the panel has issued a report saying some progress had been made and the change in council leader represented both "an opportunity and a challenge" for the new leader.
In a joint statement with chief executive Mark Rogers, Coun Bore said: "We recognise that ongoing engagement with members, residents, community groups, businesses and staff is vital and we now have an extensive schedule of events looking at the 'Future Council' programme and our forthcoming budget.
"Many of these events are face-to-face but we have also increased digital engagement to reach a larger city-wide audience.
"As the panel acknowledges, progress has been made to nurture successful partnerships with organisations across the city.
"We value our work with partners and continue to develop and strengthen these relationships.
"We are also rebuilding and re-shaping existing partnerships as we work towards realising a shared vision for our city."
Coun John Clancy, one of five councillors bidding to replace Sir Albert, said he was ready to take up the panel's challenge and would start by getting out into the wider city to meet communities and businesses.
He said: "We need to show citizens, businesses and partners that we're going to start doing things with the city, not to the city.
"Building homes, investing in jobs and feeding our children will be our priorities and we will do this together as a joint enterprise across our great city."