Gatland's position has been under intense scrutiny after a dire autumn featuring defeats by Fiji, Australia and South Africa, which extended Wales' losing run to a record 12 matches.
It is the first time since 1937 that the national team have gone an entire calendar year without winning a Test and they occupy their lowest-ever world ranking position of 11th.
A statement released by the WRU reveals chief executive Abi Tierney considered "wholesale immediate change" as part of her review, before deciding that challenging Gatland to "change Wales' fortunes on the pitch was the best approach at this time".
But Nigel Walker has resigned from his position as WRU executive director of rugby in response to Wales' decline.
"I've had a number of very honest conversations with Warren and I will make no secret of the fact that his position was on the line as we undertook our review," Tierney said.
"Further than that, like any head coach in any sport, he knows the security of his position is directly related to the performances of the team and that this is a situation that will continue to intensify.
"There is a tough challenge ahead but Warren is more than up for that challenge. We also believe he is equal to it."
Gatland is contracted until the 2027 World Cup but with a success rate of only 25 per cent for his second spell as head coach, he has been given the Six Nations to instigate a revival.
Tierney will assess Wales' performances again after the championship, which opens against France in Paris on January 31.
"I've been pretty honest in terms of welcoming scrutiny and challenge, as well as that I understand the pressures of international rugby with performances and results," Gatland said.
"I'm pleased to have the support of Abi and the board to take the squad into the Six Nations.
"This group of players has a huge amount of potential and we will be working incredibly hard together to turn around our fortunes on the pitch."
