Winchester city councillors may not have to pay back thousands of pounds to the authority.
The district auditor, the local government watchdog, had questioned the legality of backdating the controversially-increased allowances.
Some 50 councillors were affected involving about £80,000, with ex-leader, Rodney Sabine, facing the biggest bill of between £3,000-£5,000.
The auditor acted following a complaint from long-time council critic, John Hayter, of Beeches Hill, Bishop's Waltham.
But the council was certain it had acted legally in backdating the increases from February to last November and asked senior counsel for advice.
Stephen Whetnall, city secretary, told the council cabinet: "We took advice because it does not just affect this council, but others and the advice was that the backdating was lawful."
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