As reported in the Evening Times, a group of 77 residents of the Watling Street area of Motherwell, North Lanarkshire, started legal action with a view to securing remediation of the land on which their homes are built.
A total of 48 homes were included in the action raised by legal firm Collins Solicitors against North Lanarkshire Council, Lanarkshire Housing Association, Clyde Valley Housing Association, City Link and Scott Wilson (Scotland) Ltd.
Following a hearing at the Court of Session in Edinburgh, North Lanarkshire Council is no longer being pursued, although it has been left with a bill of £325,000 for air and ground tests it carried out and a legal bill of around £35,000.
Proceedings against the other four defenders will continue, with the case due back in court later this 2013.
Des Collins, senior partner at Collins Solicitors, said: "We have agreed to release NLC from these proceedings, although we know we have a strong case against them.
"NLC definitely has a case to answer in this matter, and ongoing responsibilities towards those living in the affected area, but we believe the case against other parties will deliver a quicker positive outcome for our clients."
The houses, built between 1998 and 2001, are adjacent to a former landfill site. It is also thought that the estate is near the former site of a factory which made luminous instrument panels during the Second World War.
Residents claim that toxins in the ground are responsible for a range of medical ailments.
A spokesman for North Lanarkshire Council said: "We are pleased the 77 residents, acting on the advice of their legal representatives, have agreed to drop us from the action."