Mr Blair is currently negotiating a job as a solicitor with Highland Council. The tribunal stipulated that his pay should be equal to that of a chief executive and that all rights and privileges be restored.
On a salary of £44,391, Mr Blair would be earning over £3,000 more than the council's head of legal services, a Highlands spokesman confirmed.
The outcome was 'a complete victory' and 'very satisfactory', Mr Blair told LGC. 'All I look forward to now is returning to work for the Highland community.'
'This entirely innocent and highly competent man was the victim of a vendetta against him by the SNP-led majority on the old Lochaber council,' he said.
GMB spokesman Jim Tait said: 'The one thing that sticks in our throat is that these councillors can just carry on in this appalling way and wake up the following morning still unscathed and untouched.'
Euan Harper, a former Lochaber councillor and a member of Highland Council, claimed that the council was mainly criticised on procedural matters.
'I maintain that the district council acted in good faith, given the evidence it had before it', he said.
The tribunal's full 90-page judgment confirmed there were 'no grounds based on a fair and proper investigation to hold that the applicant had contributed to any extent towards his dismissal'.
It also ordered that Mr Blair receive £70,000 in back pay.
Mr Blair was suspended in September 1994 and was finally sacked in January 1995, without access to a disciplinary hearing in the presence of an independent third party, after 11 years as Lochaber's chief executive.
A group of eight independent and SNP councillors on the SNP-led council charged him with seven offences relating to losses on two housing repair contracts and to two property deals.
Under recruitment procedures during reorganisation in Scotland, where jobs were reserved for existing council employees, Mr Blair was effectively barred from subsequent employment in local government.
However, he continued to apply for posts, including that of chief executive of Highland Council.
In July 1996, Scottish employers and unions agreed new disciplinary procedures for chief executives. These gave them the right of access to an independent third party in disputes with their employers.
This brought Scottish procedures into line with those in England and Wales.
Highland Council said its officers were considering the industrial tribunal findings and would present a report to the meeting of the personnel services committee on 30 October.