Jim Deen, who was elected to the Central ward last May, said he had been given notice by the Labour Party that they will be taking no further action.
He said: “I will now be able to resume my place as a full member of the Labour group on Worthing Borough Council.
“I’m delighted to be returning to play a full and active part in the Labour group.
“My focus has always been on serving the residents of Central ward who gave me their overwhelming support in the elections last May, and over the last few months I’ve continued to be an active Independent councillor working on their behalf.
“Now the suspension has been lifted I can get on with the important job of working with my colleagues in the Labour group to hold the Tory majority group on the council to account. These are challenging times for the council, and an effective opposition group is all the more necessary.”