SOUTH Lakeland District Council is to pay out £55,000 from the public purse following an 'administrative error'.
Four disabled people took the council to court after SLDC scrapped free parking for the disabled and introduced charges at council-run car parks from April 2011.
The claimants argued that the policy change did not recognise that it takes disabled people longer to get around on their errands, so they were effectively having to pay to park longer as a result.
SLDC's ruling Liberal Democrat Cabinet decided to settle the court action after taking legal advice.
As part of the agreement, there was no admission of liability or that the decision was unlawful, although the authority told the Gazette it was regarded as an 'administrative error,' the cause of which is now subject to an internal investigation.
The authority added that it was concerned that costs could rise if the case went to trial.
An SLDC statement said: "The authority decided to settle after finding its Cabinet had not been supplied with the full details on which to base its decision to introduce the charges.
"Cabinet first looked at the possibility of introducing district-wide charges for disabled car parking in January 2010.
"Cabinet at the time asked for a full consultation to be conducted and for the decision to be informed by a full Equality Assessment Impact (EIA).
"The consultation did not take place and Cabinet was not shown a completed EIA."
Lawrence Conway, SLDC chief executive, said: “SLDC agreed to settle this case rather than fight it in court due to the amount of costs that could potentially be awarded if the authority was to lose.
"SLDC will be investigating fully why the information required by its Cabinet was not supplied, and will take appropriate action if required.
"This is a case that has a long history.
"Since these administration errors occurred, SLDC has undergone a corporate restructure and implemented changes which ensure Cabinet and council are given all relevant information needed to make sound and informed decisions, particularly in respect of equality issues.”
He added: "The council takes its responsibility towards equality and disability seriously and has ensured that everything can be done to give those with disabilities the facilities and extended parking time needed to shop, visit and work in towns and villages throughout the district."
SLDC adjusted its parking charges in April 2012 to allow disabled car park users an additional free hour on top of any paid stay.
Councillor Ben Berry, a Conservative opposition councillor on SLDC, said: "I am flabbergasted that this policy was recommended in the face of all the evidence.
"That showed the council would be challenged by disabled groups and that similar cases across the country had been lost by public authorities.
"What I, and residents across the South Lakes, are now wondering is why do we spend hundreds of thousands of pounds every year on directors, internal and external legal teams, to bring forward recommendations, if they cannot bring forward advice that will not put vulnerable people at risk and cost taxpayers money in legal challenges?
"It is not good enough to simply say 'we are sorry and we won't do it again."
Helen Dolphin, of Disabled Motorists UK, a national disabled charity, said it went public with its concerns about the parking charges in January 2011 - three months before they were brought in.
Ms Dolphin said: "It could have saved them a lot of money if they had only listened at the time.
"The council had always said that bringing in charges for the disabled was about equality; that we should all pay the same for parking.
“But the Equality Act recognises that not everything is the same for disabled people.
"It’s a pity for disabled people that they have had to pay these charges, and it’s a pity for other people that the council is now going to have to spend more money on this."