The Queensland government has changed local government laws to save some 20 councils across the state from refunding investors $2.3b in rates.

A legal stoush over a Queensland council’s decision to charge investors higher rates has come to a halt after the state changed legislation to save local governments $2.3 billion.

The dispute started when angry landlords took Mackay Regional Council to court, outraged that two identical properties could be rated differently based on whether an investor or owner-occupier owned them.

They won the Supreme Court challenge, which meant some 20 Queensland councils with the rating system faced repaying investors.

Mackay Regional Council, which would have been forced to refund $1.6 million, and the Local Government Association of Queensland (LGAQ), appealed the decision.

With so many councils in financial limbo at budget time, the LGAQ and Brisbane City Council, which faced a $1.1 billion refund, urged the state government to end the dispute by changing the Local Government Act.

Local Government Minister David Crisafulli introduced amendments in parliament on Wednesday night.

“It is my role to try to stop what could be a massive burden for ratepayers in dealing with the past and to be able to give local governments the flexibility to be able to rate the way they see fit,” he said.

The law changes have angered Ayril Paton, the Mackay landlord who raised more than $45,000 from fellow investors to spearheaded the legal challenge.

“At the end of the day if it’s that easy for government to change something when they’re ripping people off then we are not living in a democratic system,” he told AAP.

Mr Paton is waiting on legal advice to determine the investors’ next move.

LGAQ spokesman Craig Johnstone said he expected the appeal against the Supreme Court’s decision to be discontinued.

Mackay Mayor Deirdre Comerford said her council was awaiting advice from the LGAQ and its legal team about the appeal and how it would be handled between the parties.