"We made a commitment to these families and we must honour that promise.
"At this stage no actual payments have been made (by victims' families) and I have asked staff to contact those families and inform them that no payment will now be required."
But Val Craig, whose husband John Craig died in the PGC building, was still disappointed by the way the matter had been handled by the council.
"These are the people who are supposed to be rebuilding Christchurch and they can't even decide what they're doing. A lot of the families are having a very hard time at the moment, with Christmas and everything, and this is the last thing we all needed."
She thought Mr Parker had bowed to public pressure to change the council's decision, and the council hadn't intended to pay for the plots.
"I had been prepared to pay, but it was very confusing when they said we wouldn't have to and then they said we would. I just thought 'What is going on?"'
Mrs Craig had her husband's ashes at home but was worried what would happen to them in the aftershocks.
"He's already been through one quake, I don't want him going through another one. My husband is a part of Christchurch's history and so I want him buried there."
Quake families spokesman Brian Kennedy, whose wife Faye died in the collapse of the CTV building, said he was glad the council had decided to pay for the plots.
"I think it's very good for those who want to use that facility. It will take an extra pressure of the families at an already difficult time. I'm sure it will be a relief for them to have somewhere to go and pay their respects."
However, he was not planning on burying his wife in the Avonhead Park Cemetery.
About 20 people have indicated they wish to buy plots in the outer circle of the site. The Christchurch Earthquake Mayoral Relief Fund has given $170,000 towards the cost of creating the interment site.