Saying he is a "great believer in second chances," Donald Trump announced Tuesday that he would not strip beauty queen Tara Conner of her Miss USA title.

Conner has been at the centre of a scandal since rumours surfaced last week that she had been seen in bars in New York City, where she has been living since she won the title in April.

Miss USA Tara Conner is overcome with emotion during a news conference on Tuesday, where Donald Trump announced she could retain her title despite underage visits to NYC bars.
(Rick Maiman/Associated Press)

Conner turned 21 on Monday, and it would have been illegal for her to drink before that birthday.

There had been reports the Apprentice boss would be saying "You're fired" to the Kentucky-born Miss USA.

If she had lost the title, her term would have been served by the first runner-up, Miss California Tamiko Nash.

But Trump, who owns the Miss Universe Organization with NBC, said Conner can serve out her term.

"She left a small town in Kentucky, and she was telling me that she got caught up in the whirlwind of New York," Trump said at a news conference.

"It's a story that has happened many times before to many women and many men who came to the Big Apple. They wanted their slice of the Big Apple and they found out it wasn't so easy."

Trump said Conner would be entering rehab and "is going to be the great comeback kid."

The tearful Conner, a five-foot-five blonde who has been entering beauty pageants since the age of four, thanked Trump for the opportunity.

"In no way did I think it would be possible for a second chance to be given to me," she said.

"You'll never know what this means to me, and I swear I will not let you down."

In 2002, Trump stripped Miss Russia, Oxana Fedorova, of her Miss Universe title after he said she failed to attend some of the required events.