About 30,000 drivers penalised for using bus lanes will be repaid or have their fines cancelled after a council agreed its signs were unclear.
Restrictions were re-introduced by Essex County Council in Colchester's North Hill and High Street in October.
Since then, fines amounting to about £1m have been paid to the authority.
Councillor Rodney Bass said the council would refund those who had paid and waive the fines of those who had not after complaints about "clarity".
Pensioner Frank Moore, who lives in sheltered accommodation in Colchester, received three penalty notices through the post on the same day.
"My pension is only £110 a week and the three fines added up to £90, which didn't leave me much," he said.
"I've paid them all and I'm waiting to see whether I get my money back."
'Make it clearer'
Mr Bass, the cabinet member for highways and transportation, said the council had "received a high volume of correspondence from motorists regarding the clarity of the bus lanes".
He said that as a result, "the decision has been taken to grant an amnesty on all penalty charge notices issued so far".
He added that he had "asked for additional signage and road markings to be installed as soon as possible to make it clearer to motorists where the bus lanes are located".
The new measures will include red surfacing on the bus lane on High Street to Queen Street and extra signs both before and on the bus lanes.
The penalties for driving in the bus lanes will be reinstated on 12 January.
The lanes were reintroduced following the lifting of a partial ban on cars in parts of the town centre in April.