Tim Joyce and Jenny Paton were exonerated after surveillance
A Dorset council that used controversial powers to spy on a couple and their children says it is "pleased" the laws face new restrictions.
Tim Joyce and Jenny Paton and their children were unknowingly put under surveillance by Poole Borough Council for more than two weeks last April.
It admitted spying to see if they were cheating the school catchment system.
Home Secretary Jacqui Smith has launched a review of The Regulation of Investigatory Powers Act (Ripa).
Ripa was introduced in 2000 to define for the first time when existing covert techniques, such as secret filming, could be used by everyone from the police to local councils and benefit fraud teams.
It allows a council to carry out surveillance if it suspects criminal activity.
The review has been launched after government fears it was being used for "trivial" offences such as dog fouling and littering, and will decide exactly which public authorities will be able to use the powers in the future.
Poole Borough Council came under fire when it used Ripa law to put Mr Joyce, Ms Paton and their children under surveillance.
The couple had applied to have their three-year-old daughter accepted into Lilliput CE First School - described by inspectors as "outstanding" and heavily over-subscribed - which one of their children already attended.
But after two weeks of surveillance the couple were exonerated and their daughter was awarded a place.
At the time Miss Paton said the council's actions were "hugely disproportionate".
The council also made similar checks on two other families and admitted at the time having used the powers on at least 39 separate occasions since 2000.
It later emerged the council had covertly spied on fishermen suspected of illegally gathering shellfish in Poole Harbour.
The Information Commissioner's Office (ICO) investigated and in December, the council decided surveillance should not be used for school admission investigations.
Cllr Brian Leverett, leader of Borough of Poole, said: "We are pleased the government has decided to review Ripa legislation, which we called for last year.
"The council has made only modest use of Ripa, but would welcome clearer guidance on how the legislation should be used by all local authorities.
"We acknowledged the level of public concern about surveillance and took the decision that it should not be used for school admissions."
He said the council had also reviewed its existing Ripa procedures and was also introducing further safeguards.
"It is important that local authorities have powers to tackle problems such as benefit fraud, anti-social behaviour and fly-tipping. Equally, it is essential that the public has confidence in the appropriate use of those powers," he added.