Cressida Dick was in charge of the operation that led to Jean Charles de Menezes being shot seven times in the head on a London underground train after he was mistaken for a suspected bomber.
On Tuesday, the Metropolitan Police Authority (MPA), which oversees the London force, announced that Dick had been provisionally selected to be made a deputy assistant commissioner.
Police watchdog Independent Police Complaints Commission (IPCC), had recommended that Dick face criminal action for her handling of the operation in July.
However, prosecutors decided no police officers involved in the incident should face action.
The crown prosecution service instead ruled that the London force as a whole should be prosecuted under health and safety laws.
Jean Charles de Menezes was
shot seven times in the head
The full IPCC report into the shooting will not be made public until that legal action is completed, and Dick still faces the possibility of disciplinary charges.
"Clearly there are some sensitive and unprecedented circumstances involved," the MPA's chairman Len Duvall said in a statement.
"The MPA would not prejudice an officer's fair promotion prospects by making assumptions about future disciplinary action."
He said no officer would be promoted until "outstanding issues are resolved".
Campaigners representing the family of de Menezes have previously said they wanted officers involved in the case, along with London's police chief Ian Blair, to face disciplinary action.
The family of Jean Charles de
Menezes call for prosecution
"The family feel that the senior officers involved should be prosecuted and not promoted," the family's lawyer Harriet Wistrich said last month.
"It seems a highly inappropriate time to be looking for promotion and for Sir Ian to be supporting her, when she still faces the possibility of disciplinary charges."
Blair himself was part of the five-strong panel that decided to promote Dick.
The shooting of de Menezes came in the wake of the July 2005 bombings of the London transport system.