[step:Persist the invariant cone fields under small $C^1$ perturbations]
Let
\begin{align*}
T_\Lambda M = E^s \oplus E^u
\end{align*}
be the hyperbolic splitting for $f$ over $\Lambda$. Thus $E^s$ and $E^u$ are continuous subbundles of $T_\Lambda M$, invariant under $df$, and there exist constants $C \geq 1$ and $\lambda \in (0,1)$ such that, for every $x \in \Lambda$ and every $n \in \mathbb{N}$,
\begin{align*}
|df_x^n(v)| \leq C\lambda^n |v|
\end{align*}
for all $v \in E_x^s$, and
\begin{align*}
|df_x^{-n}(w)| \leq C\lambda^n |w|
\end{align*}
for all $w \in E_x^u$.
Choose $\theta \in (\lambda,1)$. By the standard persistence of invariant cone fields under $C^1$ perturbations, applied to the hyperbolic splitting on the compact set $\Lambda$, there exist an open neighbourhood $W \subset M$ of $\Lambda$, cone fields $C^s$ and $C^u$ on $W$, an integer $N \in \mathbb{N}$, and a $C^1$ neighbourhood $\mathcal{V}_1$ of $f$ in $\operatorname{Diff}^1(M)$ such that, for every $g \in \mathcal{V}_1$, the derivative maps $dg^N$ and $dg^{-N}$ preserve the corresponding unstable and stable cones on every orbit segment staying in $W$, and satisfy the uniform estimates
\begin{align*}
|dg_x^N(v)| \leq \theta^N |v|
\end{align*}
for every $v \in C_x^s$, and
\begin{align*}
|dg_x^{-N}(w)| \leq \theta^N |w|
\end{align*}
for every $w \in C_x^u$.
We shrink $U$ if necessary so that $\overline{U} \subset W$. For every $g \in \mathcal{V}_1$, every full orbit in $\Lambda_g$ stays in $U$, hence in $W$. The cone estimates therefore define a continuous $dg$-invariant splitting
\begin{align*}
T_{\Lambda_g}M = E_g^s \oplus E_g^u
\end{align*}
with uniform contraction on $E_g^s$ and uniform contraction for $g^{-1}$ on $E_g^u$. Therefore $\Lambda_g$ is hyperbolic for $g$.
The same cone-field theorem also gives an isolating property after shrinking $\mathcal{V}_1$: there exists a $C^1$ neighbourhood $\mathcal{V}_2 \subset \mathcal{V}_1$ of $f$ such that, for every $g \in \mathcal{V}_2$,
\begin{align*}
\operatorname{Inv}(\overline{U},g) \subset U.
\end{align*}
Since $\operatorname{Inv}(\overline{U},g)$ is closed in the compact set $\overline{U}$, it is compact. The displayed inclusion implies
\begin{align*}
\operatorname{Inv}(U,g) = \operatorname{Inv}(\overline{U},g),
\end{align*}
so $\Lambda_g$ is compact and locally maximal for $g$ with isolating neighbourhood $U$.
[/step]