FREE school transport will be reinstated for children who live in Edgworth and Belmont after a U-turn by Blackburn with Darwen Council.
Pupils in years seven and eight who attend Turton School and who live more than three miles away will again be entitled to a free bus pass.
Money paid since 2011, when the decision to withdrawn funding was made, will now be refunded to parents.
Town hall chiefs said the decision was made after taking legal advice and parents have been notified by letter about the decision and have been sent a claim form.
The news comes just months after town hall chiefs said they could no longer afford to subsidise the journeys of children travelling to schools outside of the borough.
Cllr Dave Harling, Blackburn with Darwen Council executive member for schools, said: “We have had no option, due to huge government cuts in recent years, to review all spending.
"After taking specialist legal advice we have taken a decision to reimburse children and their families who have been affected since 2011. These children are also entitled to a free bus pass.”
The council did not say what proof parents needed to provide to claim the refund.
The move to reinstate the free bus travel has been welcomed by Cllr Colin Rigby who has been in talks with the local authority about the issue of children living in the two villages going to schools in Bolton for more than a year.
He said: “I do not think this was a political decision but rather a pragmatic decision. It made sense as it could have cost more to send the children to the schools in Darwen.
“There was also the sibling issue, with parents already having children at Turton School. I have been talking to the transport department for the past 12 to 15 months and welcome the decision.”
The policy to scrap help with travel costs affected children in the first two years of high school and their parents can now claim the money they have forked out.
Jake Berry, MP for Rossendale and Darwen, said: “A number of local parents raised this issue directly with me, so I’m really pleased that the council has listened to parents in Belmont and Edgworth.
“The changes just weren’t fair for families in Belmont and Edgworth and I’m just glad that the council has seen sense and changed its mind.
“This is fantastic news for families who I am sure will be delighted.”