The Bristol city councillor at the heart of the "coconut" race row has avoided a four-week suspension after an adjudication panel upheld her appeal.

Liberal Democrat Shirley Brown was handed a one-month suspension by the authority's standards committee at the end of the June, after calling Conservative colleague Jay Jethwa a "coconut" at a council budget meeting in February.

The word is used by some black or Asian people as an offensive term to describe someone who is seen to have rejected their own culture and acts as if they are white, and is "brown on the outside but white on the inside".

Mrs Brown appealed against the decision and written submissions were considered by the Adjudication Panel for England Tribunal Service last Thursday.

Yesterday, the panel announced its decision and ruled "it was not reasonable or proportionate to conclude that suspension was the appropriate sanction".

Mrs Brown, who represents Ashley ward, said she now wanted to "draw a line" under the row.

But Mrs Jethwa, who represents Stockwood, said she was "shocked and disappointed" at the outcome of the appeal.

The coconut comment came after Mrs Jethwa supported a failed Tory proposal to cut funding for the Legacy Commission, an organisation that supports black people and ethnic minorities in Bristol.

The Labour budget had allocated £256,000 to fund the Legacy Commission for 2009/10 but Mrs Jethwa had branded the organisation a waste of taxpayers' money.

In response Mrs Brown told her: "In our culture we have a word for you, a word which many in our city would understand, and that's coconut. At the end of the day I look at you as that."

After a complaint by the Tories, the standards committee issued the suspension, although a report by council officials had concluded that the term Mrs Brown used was neither racist nor bullying.

She apologised to Mrs Jethwa and has been censured and rebuked for her comments.

The Adjudication Panel said the standards committee recognised that there could have been far worse examples of abusive language and there was "an absence of any finding that, beyond being offensive and insulting, the words involved any aggravated feature such as racial abuse".

The panel added that the remark had been made in the context of a heated meeting "when feelings were running high".

Mrs Brown said: "I'm happy with the decision and now I just want to draw a line under it and move on."

But Mrs Jethwa said: "I'm shocked and disappointed that the appeal panel has chosen to override the decision of the local standards committee.

"Councillor Brown has been allowed to get away with this.

" It was disgraceful conduct and behaviour and this decision adds insult to injury."

A suspension would have meant Mrs Brown would have been unable to claim her monthly councillor's allowance, attend meetings or deal with official council business.

The punishment had been postponed pending the outcome of the appeal.

City council and Lib Dem group leader Barbara Janke said: "Shirley Brown is very relieved that the long nightmare that began in February and which has brought her so much heartache is at last over.

"It is clear from the panel's judgment that Shirley did not intend her words to be abusive and this was backed up by independent witnesses.

"I very much regret the fact that others have chosen to misinterpret the words. It has been damaging and harmful to relations between Bristol's various communities."