Last week, Sandilands, 38, was suspended from hosting duties for the second time in five weeks after sparking public outrage by commenting that Kath & Kim actress Magda Szubanski would lose more weight if she entered a concentration camp.
Today, Austereo released a statement about Kyle’s retainment with the network, saying: "2Day FM advises that Kyle Sandilands will remain suspended without pay until October 7, 2009. The period of the suspension will therefore be four weeks, of which one week has already been served.
"The pay penalty will be directed by 2Day FM to community charitable causes. In addition Kyle Sandilands will attend external counselling.
"2Day FM has taken into consideration Sandilands's concern and remorse for statements made."
Meanwhile, rival Sydney FM breakfast duo Todd McKenney and Sonia Kruger - who both also star on Australia’s Dancing with the Stars - have been axed from their Mix 106.5 radio show due to dwindling ratings.
Kruger will remain with the station until her contract expires at the end of the year, while McKenney will leave his position immediately.