The 2% increase, which took effect on July 1, to offset consumer price index (CPI) rises, was reversed yesterday and charges will return to the 2010-11 levels.
Any consents already processed at the increased rate will result in a refund.
Council development services manager Kevin Thompson said the change was correcting a mistake.
"I put the budget together in September last year and we approved the 2% CPI increase.
That then started going through the annual plan process and was ratified last month, but that was actually an oversight," he said.
While the fees themselves did not increase, the CPI rise "went against the intention of what the council originally wanted", Mr Thompson said.
The council called for a review of the cost of building consent fees after a report showed they, and the cost of running the building control department, were significantly higher in Dunedin than other centres.
A report was due to go to the planning and environment committee in September which would include a range of options for it to consider to rectify the situation.
It would look at the possibility of introducing an hourly rate charge, rather than a flat fee, Mr Thompson said.
While he could not rule out fee changes "down the track", he did not envisage a CPI increase being put back on consent fees soon.
Master Builders Federation Otago president Mark Ward described the fee reversal as a "step in the right direction".
"Hopefully, there will be more to come. They have a little bit of a way to go to get to the level of the rest of the country," he said.
He was interested in seeing what would come of a meeting between the council and the building industry on July 14.
More than 200 people had been invited to attend one of two meetings at 3pm and 6pm at the Kingsgate Hotel, Dunedin.
"There is a keenness to come along to the meeting to put their thoughts across," Mr Thompson said.
