A public inquiry was set up by The Planning Inspectorate in February to inspect the council's enforcement notice on the grounds that the primary school and nursery was not safe or fit to operate as a school.
The enforcement notice was quashed and planning permission granted at Newham Town Hall in East Ham on May 23.
Headteacher Hasib Hikmat estimates it has cost the school £52,000 in legal fees to overturn the decision.
He said: "In a time of austerity, the council think it's fine to be spending public money, probably tens of thousands of pounds, on legally fighting something that made little sense from the beginning trying to shut down a school that provides extra capacity and jobs for local people which runs with no financial assistance from the council."
Mr Hikmat said the parents and staff were "chuffed" at the Planning Inpectorate's decision and plan to have "a very, very big party" to celebrate.
He added: "Newham is in dire need of better schools and it's opened the door to more investment in the development of industrial sites in Newham and, hopefully, more schools. We do want to build bridges with the council. We are not here to cause trouble, we are here to operate a school and invest in the community."
Now Alif Academy has planning permission, they hope to win a Nursery Education Grant to help with their development.
Newham Council does seem to have a tendency to waste public money trying to shut down local Muslim institutions. Last year the council's enforcement notice on the Tablighi Jamaat mosque in West Ham was also overturned by the Planning Inspectorate.
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