Edinburgh Liberal Democrats will not make any moves to take control of the council following a by-election win, which made them the City Chambers' second largest party.
Talks held last night concluded "unanimously" that the group was better off remaining in opposition as they fear a potential "dangerous power grab" by the SNP.
Lib Dem leader on Edinburgh council Kevin Lang said any attempts to seize power would be "unworkable" and added his group would continue "voting on issues on a case by case basis."
READ MORE: Edinburgh by-election win for Liberal Democrats makes them city's second biggest party
The decision shores up the administration's position - for now at least - following weeks of speculation over whether Labour could continue in power after failing to pass a budget.
February's budget meeting spelt disaster for the minority ruling group after tactical opposition voting made their plans fall at the first hurdle.
Labour's loss was the Lib Dems' gain however, with a majority of councillors backing their spending proposals in the final round, creating an unusual and reportedly never-before-seen situation in the council where the administration is left implementing an opposition budget.
Another political win came last Thursday (March 9) after the Lib Dems secured a landslide victory in the Corstorphine/Murrayfield by-election. Fiona Bennett became the ward's newest councillor, elected with over half of all first preference votes cast.
The result moved the party into second place in the chambers with 13 councillors, behind the SNP but now outnumbering Labour who were left with 12 members after Ross McKenzie's resignation at last month's hectic budget setting session.
Lib Dems met on Monday (March 13) to decide how to best take advantage of their "strengthened position."
The two-hour meeting - described by one councillor as a "Sistine Chapel lock-in" - saw the group mull over their next moves.
A Lib Dem source said: "We brought pizzas in and nobody was allowed to leave until we reached a decision.
"There was inevitably lots of questions coming out from the implications of last Thursday and we agreed we had to make a decision in terms of what we wanted to happen next, even if that decision was simply to continue with the current arrangement."
The two options in front of the group was to either look to form a minority administration of their own or enter a formal coalition with Labour.
However both were ruled out over fears it could have a 'destabilising' effect in the council and open the door to the SNP returning to power in the capital.
A Lib Dem source said: "We quickly realised that if we were looking to replace the Labour party it was very unlikely they would offer us support in return, and so the numbers simply wouldn't work.
"That made the option of a Lib Dem only administration unworkable.
"Labour often rely on us most of the time, we would be relying on them most of the time and if we had removed them from office I think it would be quite difficult to expect them to provide that level of support.
"In that scenario, all that would happen is that the SNP with the Greens would be able to come in.
"We then looked at the option of a partnership arrangement with Labour and if we were doing that we would be doing that with the intention of trying to provide more stability.
The source claimed there is a "fragility inside the Labour group right now and even if it was a partnership, there are obviously Labour councillors that have significant roles who would have to give those roles up and we also recognise that there's a fragility coming out of the budget process.
"Any attempt to provide more stability, we thought, actually could end up having the opposite effect."
Councillor Lang said: “We recognise that any attempt to change the current administration on Edinburgh Council risks a dangerous power grab by SNP councillors who, just last month, proposed hammering households with an eye-watering 20 per cent hike in their council tax bills.
“This is why the Liberal Democrat group has agreed to continue in opposition, voting on issues on a case by case basis.
“Over the last 10 months, we have voted with the Labour administration when we agreed with it and voted against it when we did not. We will continue with this constructive approach - voting for what we think is right for our city every time."
The approved Lib Dem budget has caused problems for administration councillors as it crossed Labour's red policy lines, proposing to end the council's commitment to no compulsory redundancies and outsource more waste and cleansing jobs to save money.
Council leader Cammy Day has since said both decisions would need to be ratified by full council before being rolled out.
A Lib Dem source accepted these would be unlikely to be passed as a majority of councillors would not support them, and said the group is "not wedded" to the savings.
The source added: "The critical thing is given the fact the budget was based on savings being made from these areas, if we're not making savings from these areas, where does the money come from?"
"We're open to discussions about options around that, but from our part we were clear on what our priorities are - protecting school funding, improved roads and pavements - we want these things to be protected.
"If there are other ways in which we can make savings whilst protecting that core integrity of the priorities in that budget then of course we're open to looking at that."
READ NEXT:
- Delay to new Edinburgh strip club licensing scheme after council's bid to ban them struck down in court
- Over 20 Ukrainian Edinburgh refugee households made homeless in city
- Delays to new Edinburgh bus tracker screen roll-out cost council £1.7m
- Edinburgh by-election win for Liberal Democrats makes them city's second biggest party
- Edinburgh apprenticeship scheme scrapped after just TWO employers sign up
