Aya Yousef was sacked, and divorced by her husband, after she was filmed by a colleague at a work social event on a Nile boat without her permission.
Footage shows her moving to the music alongside male teaching staff.
Belly-dancing is said to date back to Pharaonic times but it is often frowned upon now for women to dance in public.
The video of Ms Yousef, who is wearing the Islamic headscarf and a long-sleeved dress for the daytime river trip, looks very tame by Western standards.
However, as it was widely shared on Arab social media in the past week, it prompted an outcry among Egyptian conservatives.
Her critics claimed she had acted shamefully: "It clearly expresses the poor times we live in!! Anything is permitted," wrote one Twitter user.
"Education has reached a low level in Egypt," another commented, calling for intervention by the relevant authorities.
Ms Yousef was then sacked by the primary school in Dakahlia Governorate in the Nile Delta, where she had worked for several years teaching Arabic.
She has vowed she will never dance again and said that she had contemplated suicide during her recent ordeal.
"Ten minutes on the boat in the Nile cost me my life," she told journalists.
Women's rights advocates in Egypt also spoke out strongly, insisting the teacher did nothing wrong and saying that she was the victim of a witch hunt.
In her support and in defence of personal freedoms, the deputy head of another school posted photographs on social media of herself dancing at her daughter's wedding.
The head of the Egyptian Centre for Women's Rights, Dr Nihad Abu Qumsan, offered Ms Yousef a job in her office and asked her to bring her contract from the education ministry in order to file a legal complaint against her dismissal.
This may have helped prompt a rethink. Local authorities have now appointed Ms Yousef to a position at a new school.
The teacher complained the affair was "a transgression of [her] privacy".
She pointed out that she did not dance at a public institution or in front of students and said she planned to sue the person who filmed the video last month.