Castle Point Council has been handed almost £300,000 of Government cash to help it on the road to recovery.
And the move means that the council - which faced being taken over by outsiders - will continue to be run by locally-elected councillors.
The news is a massive boost for the Tory administration, which has been drawing up a recovery plan after being heavily criticised by inspectors for the way the authority was being run.
Deputy Prime Minister John Prescott warned that unless the council pulled up its socks, he would appoint an interim management from outside to steer it back into calmer waters.
Council leader Pam Challis, deputy leader Colin Riley and interim chief executive, Tom Moloney, all attended a Whitehall meeting with Government minister, Phil Hope, for a review of the council's plans for improvement.
The council has already started on the first phase of its recovery programme.
Mrs Challis said: "This is an excellent result for the council. We have demonstrated that we can secure improvement and meetthe Government's requirements with a fully costed and considered plan.
"It means that control of the council by locally elected councillors for local people is to be maintained rather than suffer Government intervention. We were able to demonstrate to the Minister that we are already improving services. For example, we are much quicker in handling claims for benefits.
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