From Monday October 21, 4,000 homes across Maidenhead and Windsor will no longer have to pay the fees which will save people up to £60 a year.
The council is also backdating the scheme so anyone who bought a permit which came into effect on October 1 will be refunded.
The move will see it miss out on an estimated £70,000 in revenue but the borough has said it is 'right' that people aren't charged to park outside their own homes.
The existing scheme means households can apply for two paid-for permits.
It costs £20 for the first permit and £40 for a second.
Under the changes they will still receive permits which remain eligible for their own residential parking zone.
The arrangements for visitors will remain the same.
They can either use paid-for visitor permits or pay-and-display parking.
The change will only affect council-run permit parking and not apply for private permit schemes.
Cllr Carwyn Cox, cabinet member for environmental services, said: "We have ran this through finance.
"They are happy that we can afford to do it and we think it is right that our residents shouldn't have to pay to park at their homes."
Council-run car parks were used 1.196 million times in the first five months of this financial year compared to 1.158 million for the same period last year.
There was also a 30 per cent increase in season ticket sales this year from 2011-2012.
Maidenhead's income from season tickets is up to £316,000, from £284,000 a year ago.
Windsor's season ticket income has dropped to £175,000 from £186,000.
Parking manager Neil Walters said a major factor in Maidenhead's increased season ticket income is that the withdrawal of free parking in Stafferton Way.
No reasons for the decline in Windsor tickets has been given.
Top Ten Articles
The Met Office has issued a yellow alert for Windsor and Maidenhead, Slough and Wokingham, warning that rain moving eastwards across the south of the country may turn to snow in some places.