Accounts released earlier this year revealed the service will be haemorrhaging almost £1m a year by the time the contract with NCP expires in September 2009.

But in a turnaround, Lancashire County Council now says the service is in good health – because money raised from parking meters in Preston and Lancaster should have been counted as Parkwise income.

Only Preston and Lancaster have on-street parking meters and, until now, money raised from them has been kept separate and used just for schemes in the two cities.

But legal advisers have now decided the cash cannot be ring fenced and must be included in the accounts.

Coun Matthew Tomlinson, for the county council, said an audit has identified that some councils have been adding overhead costs to the accounts which should not have been there.

He said there were huge discrepancies in how much each authority was spending to issue tickets because some did not understand what they were supposed to count as costs.

Coun Tomlinson said: "The money that goes on the meters has never been counted as Parkwise income.

"We got legal advice and advice from the accountants and they are saying it should be counted."

Geoff Driver, leader of the Tory group at Lancashire County Hall, said: "It just shows that the whole scheme was not implemented properly.

"If right at the end we find we have not been allocating costs and income properly it does not inspire confidence in anybody."

A system has now been put in place to ensure there are no more "discrepancies" between councils.

Coun Tomlinson said: "In a way it is a good thing we had this deficit because it has made us look really closely at how Parkwise works.

"It does not get away from the fact there may be areas significantly more efficient at issuing tickets than others."

The Evening Post revealed in June it was costing Parkwise an average of £8 to issue every ticket.