She obtained judgment at the High Court in her lawsuit over the social media comments by John Carson.
Mr Carson is now set to issue a “fulsome and genuine apology” at a further hearing to determine the level of damages, his barrister indicated on Thursday.
Defamation proceedings were issued after the posting appeared on Facebook in April 2021.
Mr Carson, an alderman on Mid and East Antrim Borough Council, made the comments under a photo of the Sinn Fein vice president.
He subsequently apologised online, but was suspended for three months by a local government standards watchdog who held the remarks were unreasonable and misogynistic.
In her statement of claim, lawyers for Ms O’Neill argued that the comments had a defamatory meaning by characterising her as “a subservient and incompetent female politician”.
The posting was demeaning, misogynistic and directed at core features of her womanhood, it was contended, as well as being motivated by personal bigotry and political gain.
It has now emerged that Ms O’Neill obtained judgment by default last December when no defence to her claim was entered.
She was due to attend the High Court today to give evidence as part of an assessment of the appropriate damages to award.
But the hearing was adjourned to allow Mr Carson’s newly instructed legal representatives more time.
Counsel for Ms O’Neill, Peter Girvan, expressed disappointment that the DUP councillor had not engaged in the proceedings sooner.
“It’s one of those cases where there’s been a head in the sand (approach),” he claimed.
Michael Bready, representing Mr Carson, confirmed no attempt will be made to set aside the default judgment.
“My client has been advised and accepts that,” he told the court.
“There will be a fulsome and genuine apology in whatever form we can agree between ourselves.”
Following the hearing Ms O’Neill’s solicitor, Padraig O Muirigh, welcomed the decision not to contest the previously obtained judgment.
He said: “The libel of our client was demeaning and grossly misogynistic.
“It was published deliberately and maliciously in order to injure and denigrate her reputation, and inculcate a culture of derision of women in politics.”