The statement issued by Territory and Municipal Services follows the backlash over news that Canberra's Richards family could be forced to hand over thousands of dollars to compensate for safety and traffic control costs.

David Richards met with TAMS representatives on Wednesday after his family installed more than 500,000 lights at their Forrest home.

He was informed he may be liable for costs associated with safety and traffic control and that costs. If they were imposed, the money would have been effectively taken from funds raised for children's charity SIDS & Kids ACT.

Mr Richards said he was relieved to hear the government’s decision on Thursday.

“It’s really good for the neighbours, the neighbourhood and our peace of mind,” he said.

“It’s also great for SIDS and all the money can go where it’s meant to go.”

He said he would be indebted to the government, which intends to begin traffic operations as soon as next week.

Roads ACT director Tony Gill said the government’s assessment had been completed and the government would cover the costs for traffic measures.

“While the ACT government has not yet charged an event organiser for having a Christmas light display, it is appropriate that we have a policy in place to assess each proposal on a case-by-case basis,” he said.

“Both event organisers have confirmed they are raising money for charity. As such Roads ACT has been able to make a common sense decision to assist these events by implementing necessary traffic management measures to ensure public safety and to limit the disruption by using existing resources within the ACT government as we have done in recent years.”

Government guidelines published online state that displays may be classified as special events if they increase traffic in the area, affect noise levels or involve larger installations at one or more home.

If classified as a special event, organisers may have to undertake a formal assessment of risks, take out public risk insurance cover and contribute to payment for management costs.

Small-scale installations may also be reviewed if the government receives complaints.

Mr Gill previously said the policy had been in place for several years and was similar to others in place across the country.

He said the government would look to absorb fees of up to $2000 but costs might be shared if they went beyond that figure.

“'There are costs associated with providing special arrangements,” he said.

“Either those costs are borne by the event organiser or by the ACT government.”

The back down comes after recent controversy around a government proposal to force charities and sporting clubs who hold fundraising barbecues to appoint food safety supervisors, at a cost of up to $150. It later announced charities and community groups would be exempt from the requirement.

Chief Minister Katy Gallagher said she was pleased no householders with Christmas light displays would be charged traffic management fees this year.

But Ms Gallagher said the fees were appropriate in some circumstances.

“The guidelines do allow for charging and the instance where it may be looked at by government is where you are putting resources in and people might be setting up a stall or selling things – maybe not for charity,’’ she said.

“So I think it’s important to keep that discretion there. But in this instance I think it reflects what the community thinks and the work that’s being done for charity.’’

with Peter Jean.