Edinburgh Council is to repay £2m it charged 820 older people for help in preparing meals under the free personal care policy.
Edinburgh is the first council to offer repayments since the Scottish parliament's health committee called for the status of food charges to be clarified last summer.
The council said an independent advocate advised that under free personal care legislation it was illegal to charge for preparing ingredients, cooking and reheating meals, and helping the person to eat, though not for shopping or providing meals.
As well as the one-off payment, the council estimates the policy change will cost it £1m a year, although it hopes the Scottish executive will increase funding. Refunds should be made by the end of March.
An Alzheimer's Scotland spokesperson said it was "good news" and hoped that it would encourage others to follow suit.
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