Stephen McNeil said Wednesday his party wasn't clear on the rules when the caucus sent 33,000 postcard-style flyers into the vacant ridings of Cape Breton Centre, Sydney-Whitney Pier and Dartmouth South during the third week of May.
He said he's received clarification from Elections Nova Scotia and the party will pay the $7,000 cost.
"There will be no public money used to pay for those mailouts," McNeil said in an interview.
On Tuesday, Elections Nova Scotia said it was investigating a complaint by Tim Houston, a Progressive Conservative member of the legislature, alleging the Liberals broke a rule banning the use of government money for partisan materials during an election campaign.
The letter from Houston also said the legislation defines a byelection campaign as beginning when the seat becomes vacant.
All of the ridings that received the mailouts are vacant, but the date of the byelections hasn't been announced yet.
McNeil said the Liberals thought the mailout was permitted in the time before a byelection is called.
He said there was uncertainty about the rules because other parties had sent out flyers to vacant ridings before general elections.
"It was confusing to everyone ... Every party has operated with the assumption that the rules that apply to general elections also apply to byelections. It was pointed out that wasn't the case, and we will abide by that rule," he said.
Houston says the premier and his staff were caught breaking rules they should have been aware of and they are making excuses.
"The rules were pretty clear on this situation. The premier is a very experienced politician with a full caucus staff and they definitely should have known what the rules are," he said in an interview.
"What they did was wrong, and they got called on it and they got caught for it and now they're trying to cover it up."
Elections Nova Scotia has said it is investigating the complaint by Houston and will make a ruling on whether the Liberal action was a violation of the election rules.
McNeil said the party will abide by whatever decision the agency makes.