Llanfyllin High School has two years to comply with transport rules
A school in Powys has been given two years to comply with council rules which ban the use of school funds to transport pupils.
Llanfyllin High School was found to be subsidising transport to almost 200 pupils from outside the catchment area.
An investigation revealed it had spent more than £460,000 over five years - money which should have gone on education.
Powys council said the two-year offer was to protect parents and pupils.
Initially, the school was told it would have to repay £17,000 into the school budget and comply with the council's transport policy by this September.
The council's deputy leader, Cllr Wynne Jones said the cabinet had thought "long and hard" about the situation, and that the school's failure to comply with policy placed parents and pupils "in an impossible position."
He said: "Parents who use our vacant seat scheme to transport pupils to schools outside of their catchment know that the scheme is limited and could be withdrawn at any time."
But he said parents at Llanfyllin were not given the same information and were "misled," and that it was in the "interest of fairness to pupils" that the council allowed the school two years to comply.
In the meantime Llanfyllin High School is required to make sure its transport charges match those of the Powys vacant seat scheme.
Cllr Jones added they understood the decision may anger schools which followed the rules, but it had been taken to protect pupils at a crucial time in their education.