Plans to set up an authorised and managed travellers' site at Haldon near Exeter are to go forward.
Teignbridge councillors met on Tuesday to discuss the problems facing the scheme, which ran into trouble when several families moved off the camp into housing.
There were fears that the Homes and Communities Agency would ask for a refund of the £1.2million it had offered to pay for the new amenities, if the site should be under-occupied in years to come.
Councillors say an agreement has now been reached with the HCA which will enable the project to go ahead, without any risk to the taxpayer.
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