The convoy was spotted parking illegally in central Wellington while the deputy prime minister visited upmarket Haight Ashbury salon in November.
Wellington City Council initially said it would issue tickets to Mr English's security detail but, after discussions with its lawyers and the diplomatic protection squad (DPS), it concluded that his drivers were within the law.
Council chief executive Garry Poole said police could park anywhere, as long as it was in the course of their duties. Mr English needing a haircut was a considered a valid excuse.
"While we do have the legal right to issue infringement notices to any vehicle parked unlawfully, police vehicles are exempt from parking restrictions if they are used by officers in the course of their duties," he told the Dominion Post.
"We have examined the circumstances of this particular case and I am satisfied that the exemption applies."
At the time of the infringement, Mr English was acting prime minister and was required to have DPS officers nearby at all times.
Drivers normally face a $150 fine for parking in a mobility zone, and a $60 fine for parking on yellow lines.
Mr Poole said he was convinced no road user was inconvenienced by the drivers' actions.
A spokesman for Mr English had no comment to make on the council's U-turn.
