POWYS County Council has acknowledged it must follow all guidance after its decision to close Gwernyfed High School had to be overturned.
The council had agreed in March this year to start a consultation to close both Gwernyfed and Brecon high schools and replace them with a 900 pupil school as part of a £55 million Beacons Learning Campus in Brecon.
But following a legal challenge by campaigners who sought advice from one of Wales' leading experts in education law, Michael Imperato, the council has withdrawn its decision.
The council is now expected to restart the consultation process, including talking to the school, parents and community members before deciding the future of the school.
Councillor Arwel Jones, the council's cabinet member for education, said: "If we are to provide the best possible education for our learners, we must change the way we organise our secondary schools.
"As we progress our secondary school organisation programme, it is essential that we comply fully with Welsh Government and local authority policy and guidelines. We will ensure that this is the case going forward."
Mr Imperator, of Newport law firm Watkins & Gunn, said: "A popular, good performing secondary school has been given a reprieve from a death sentence.
"Thankfully, by securing legal aid, we were able to demonstrate that Powys County Council had acted unlawfully. The correct process will now be followed and the Gwernyfed High School community will have the opportunity to voice their views on the future provision of education in their area."
Mid and West Wales Liberal Democrat AM, William Powell, who is a governor at the school said: "I am delighted that Powys County Council has decided to quash current plans to close Gwernyfed High School.
"I have said, previously, that there were serious shortcomings with the proposals. It is great to see that, with the help of Michael Imperato and legal aid funding, the community were able to get the result they wanted."
The party's Welsh leader and AM for Brecon and Radnorshire Kirsty Williams, added: "This is very welcome news, but now the fight begins again to convince Powys County Council that we need secondary schools in both Brecon and Gwernyfed.
"These plans were flawed from the start, yes Brecon needs a new school but it should not be at the expense of Gwernyfed, which is a fantastic school and is a crucial part of the community.
"The Welsh Lib Dems have worked tirelessly alongside campaigners to get the council to reverse their decision, I am delighted that, with the help of a legal challenge, common sense has prevailed."
Cllr Jones said the council is committed to strengthening secondary school provision and to provide a service capable of delivering the full national curriculum that 'can also meet the challenges of 21st Century education'.
The council had said closing both schools and creating a new 11 to 16 school, at the current Brecon High School site, from September 2018 would provide a sufficient number of pupils for a sustainable school.
The plan for a Beacons Learning Campus, which has won in principle support to develop a business case from the Welsh Government, would also include a sixth form college run by the NPTC college group.
Powys council had been due to start a consultation over the plan to close both high schools in September.