The festival, which ended on Saturday, became mired in controversy after differences emerged among committee members about a rule banning "products and services relating to the occult".

Last week, the Weekly reported the controversial ruling was seen by some as an attempt by Christian committee members to foist their religious views on a publicly funded event.

Held on Main Street each year, the event is partially funded by Moorabool Council.

The festival, which costs $8000 to run each year, received a total of $8000 from the council across 2009 and 2010.

The council's guidelines say groups receiving funds are encouraged to develop and deliver events that show local talent, provide public entertainment, and foster community participation, connectedness and diversity.

Mayor Pat Griffin said funding recipients were expected to adhere to the law and council regulations.

"In the future, we will be looking more closely at the events to make sure council regulations are being followed," he said.

Meanwhile, Pagan Awareness Network president David Garland described the committee's ban as "medieval".

"We want to know if flaming torches and pitchforks formed part of the festivities."

Mr Garland said the incident highlighted discrimination faced by people practising alternative beliefs in Australia.

"It's clear that this ban has been put in place by individuals who have a fundamentalist agenda.

"What is less clear is whether they have the right to enforce a rule that appears to discriminate on the basis of religious belief, especially when public funding is involved."

Mr Garland said the network welcomed the council's decision to take a more proactive view in promoting an inclusive and tolerant festival.

He said the network would support anyone wanting to register a complaint against the festival committee with the Victorian Equal Opportunity and Human Rights Commission.

Festival secretary Gail Wager last week said the matter had been resolved because the stallholder concerned had agreed to abide by the existing regulations.

The stallholder, whose identity is not known, agreed to withdraw the tarot books and offer only natural therapies and massage.