The council has agreed to pay compensation of 500 each to the twofamilies and keep its admissions policy under review after aninvestigation by the Local Government Ombudsman.
In a report published last week, the watchdog said Staffordshire hadenforced its admissions policy too rigidly "and with insufficient regardto parent choice". This meant the children were not allowed to attendthe nursery even though there were 12 places available. The ombudsmanrecorded a finding of "maladministration causing injustice".
The dispute took place soon after Staffordshire introduced a newadmissions policy in September 2004.
A spokesman for the council said the policy wasn't at fault, only theway it had been implemented. "We did, as a result of this, liaise withnursery providers to make sure this kind of issue would not reoccur," hesaid.
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