Matthew Jones, Aled James and Byron Rees's case began in 2003

Ceredigion council had gone to the House of Lords to defend its decision four years ago to refuse to fund a bus link to Ysgol Preseli in Pembrokeshire.

But this week it "reluctantly" withdrew its case from the Court of Appeal.

The court heard the council was part of a consultation which agreed rules in Wales change to provide free transport to the nearest suitable school.

The youngsters' legal team claimed the case could cost Ceredigion council taxpayers £500,000.

The local authority said this was a "gross exaggeration". It said if its appeal had been successsful it would have saved transport costs for councils in Wales and England.

The three boys, Matthew Jones, Byron Rees and Aled James all attend Ysgol Preseli, which is eight miles from their homes.

In August 2003, Ceredigion Council refused to fund the boys' daily bus journey on a transport service supplied by Pembrokeshire council.

This is a great victory for children and parents in rural Wales Michael Imperato, solicitor for families

It said it would provide free transport to Welsh-medium Dyffryn Teifi school, which is within the county but 18 miles from the boys' homes.

In June 2004 the High Court ruled Ceredigion Council had acted unlawfully. In June 2005 the council won the right to appeal to the Court of Appeal.

The case reached the House of Lords, the highest court in the land, before returning to the Court of Appeal this week, where Ceredigion withdrew its case.

Michael Imperato, of Cardiff legal firm Russell Jones and Walker, said: "This is a great victory for children and parents in rural Wales.

"As long as it is more than three miles away the local authority must provide free transport to the nearest suitable secondary school.

Law change

"It doesn't matter if the school is in another county or is not the one the council would like the child to go to."

In a statement, Ceredigion council said changes in the law looked set to make the local authority's argument "academic".

It said a consultation document on school transport, backed by the Welsh Local Government Association, was likely to become law in Wales from September 2009.

It read: "The council's original appeal was brought before the change in the law in England and the recent proposed change to the law in Wales."