The council's education committee acted after a three-day hearing before the full committee overturned a recommendation by Ken Macleod, the director of education, to dismiss the teacher in a case which is said to have polarised feeling in the town.
Mr Macleod had upheld the views of the school head, who had instigated the disciplinary proceedings, and Christine Dignan, the head of secondary education, who ruled that the teacher should be dismissed for "gross misconduct".
The teacher was alleged to have punched a fourth-year boy in the stomach with a clenched fist after he found him misbehaving and using abusive language in the music room after school hours. The incident took place on November 28 and the teacher was suspended on full pay on December 2 pending an investigation.
The case was eventually brought to the full education committee, itself an unusual move since its consent to dismiss a teacher is no longer required by law. Ian Pennie, the education chairman, failed to find a seconder for his sacking motion and the teacher was reinstated. Mr Pennie recorded his dissent at the decision.
Mr Macleod said the review would produce guidelines for education department staff and deal with procedures for questioning young witnesses. The school was said to have paraphrased pupils' evidence.
The boy's father, who has vowed not to let the matter rest, says his son was "intensively interrogated" by Andrew Gibb, the Educational Institute of Scotland's leading legal adviser, who defended the teacher.
Some councillors were unsparing in their criticisms. Marjory McQueen described the hearing as "a shambles". Tom McAughtrie, a chairman of education on the former regional council, blamed "inexperienced" councillors.
Friends of the teacher, meanwhile, blame the education department for failing to convince its own committee of the merits of its case. The father, himself a council employee, says "amateur Perry Masons" on the committee disregarded the advice of their professional advisers.