In its annual budget the council approved using £1.1m from PEF to pay for school support functions, such as classroom assistants, and another £133,000 to provide breakfast clubs.
The SNP opposition argued the £8.8m PEF which the Scottish Government had earmarked for North Lanarkshire should be used to close the attainment gap in poorer areas.
However, the Labour administration hit back claiming so much of its budget had been cut it had no option but to use PEF for existing services.
Ultimately though with the threat of the Scottish Government refusing to release the PEF to the council it has agreed to find the funding elsewhere.
Council chief executive Paul Jukes said: “We have been in discussion with the Scottish Government about the use of the Pupil Equity Fund.
“To be clear, our proposals did not represent top-slicing of any kind. However, given headteachers require certainty about the money available to them now, we have taken a pragmatic approach to ensure pupils are not disadvantaged.
“There will be no compulsory redundancies within the cohort of classroom assistants and we will continue to work with headteachers and school communities to help them to maximise the resources available to them.”
Motherwell and Wishaw MSP Clare Adamson welcomed the turnaround from the council and the PEF has now been approved for release.
She said: “I raised this matter in the Scottish Parliament and was subsequently criticised by the leader of the council but, the reversal of the council’s previous stance validates my position that the council were in breach of the rules on PEF and were taking money away from the head teachers and the purpose it was intended.
“I welcome the release of the PEF money and hope head teachers will be able to make good use of the extra money”.