City of York Council approved plans to write to about 35,000 motorists yet to claim their money back.
About 47,000 fines totalling £1.3m were issued between August 2013 and April 2014.
However, only approximately 12,000 refunds claims have been submitted.
A council spokeswoman said it would write to each driver issued with a fine to advise them of the refund procedure at a cost of up to £150,000.
Drivers will then have until 31 December to submit their refund request, following an extension of the previous 30 June deadline.
Previously the council had said refunds would only be issued to those who made a claim via the council's official application process.
Refunds were offered to drivers after a traffic adjudicator said the council had "no power" to issue fines because signage and CCTV were inadequate.
Drivers fined for crossing York's Lendal Bridge during a trial closure are to be told they are entitled to a refund after councillors overturned a decision not to directly contact them.