Lambeth Council has handed back £100,000 to drivers who were fined because of its confusing road signs.
The south London authority issued 1,635 fines for motorists who used a road in Balham between May and November 2022.
Restrictions banning cars from the road during drop-off and pick-up times at a primary school came into force in spring 2022.
But they were removed after the council faced nearly 400 challenges from drivers claiming the signs were hard to read.
The Labour-led council at first rejected the appeals of all but 10 people, but has now done a U-turn and agreed to repay all fines.
Lambeth has permanent traffic restrictions around 20 schools across the borough. The first no-car zones were set up in 2019.
Liberal Democrats have branded the situation ‘shambolic’.
Donna Harris, councillor for the area where the road is said: ‘You have to ask, why didn't the council put the right signage up in the first place and why did it take them months to admit their mistake?’
A Lambeth Council spokesperson said: 'We acknowledged that the signage in place at this location, although compliant, needed better positioning. We have therefore taken the decision to refund any penalty charge notices issued and will cancel any that are outstanding.'
