Plans to allow nurseries and childminders in England to look after more children are being dropped, Nick Clegg has said.
The deputy prime minister telephoned leaders in the childcare sector on Wednesday morning and told them the plans were "dead in the water".
The government had previously said the changes would increase childcare places and quality and cut costs.
But critics said care quality would suffer.
The changes, which were due to come in this autumn, would have allowed an increase in the ratio of children to carers, as long as carers' qualifications met new standards.
'Evidence against change'
A statement from Nick Clegg's office said: "After lengthy discussions both inside of government and outside with stakeholders, the deputy prime minister has today confirmed that the changes to ratios for pre-school children that were consulted on earlier in the year will not go ahead."
Mr Clegg said the evidence was "overwhelmingly against" changing the rules on ratios.
"The proposals to increase ratios were put out to consultation and were roundly criticised by parents, providers and experts alike. Most importantly, there is no real evidence that increasing ratios will reduce the cost of childcare for families," he said.
"The argument that this will help families with their weekly childcare bill simply does not stack up.
"I cannot ask parents to accept such a controversial change with no real guarantee it will save them money - in fact it could cost them more."
Last month Mr Clegg raised concerns publicly about the plans and insiders told the BBC he would block them.
A source close to the prime minister said David Cameron was committed to reducing the cost of childcare for parents and measures would be announced soon.
Sharon Hodgson, shadow children's minister, said: "This just goes to show that David Cameron does not have a credible plan to help families access good quality, affordable childcare.
"The government's own experts were agreed that cutting childcare staff numbers would have seriously endangered quality and safety, and would not have cut costs to parents.
"Ministers have wasted a year on these flawed plans while childcare costs have kept on rising and thousands of childcare places have been lost."
Childcare charities have welcomed the news.
Neil Leitch, the chief executive of the Pre-school Learning Alliance, said the group was "absolutely delighted" that the deputy prime minister had intervened and listened to concerns.
"The sector is supportive of the government's aims to raise the status and quality of the childcare workforce, but this proposal was not the way to achieve this," he said.
"The government argued that these changes were in the best interest of parents and would lead to lower childcare costs, but parents themselves made it abundantly clear to us that while they would like cheaper childcare, jeopardising quality and the safety of their children was a much higher price than they were prepared to pay."
Liz Bayram, joint chief executive of the Professional Association for Childcare and Early Years, said the organisation was "relieved" by the decision.
"Whilst today's announcement is good news for children and families, there remains a great deal of sector concern around other government childcare proposals. There needs to be a more full and open discussion with the sector and parents around how to make this a reality."
Mumsnet co-founder Justine Roberts said users of the site had opposed the changes and would be relieved.
"Parents were unconvinced that the suggested changes would lead to lower childcare costs but did believe that the quality of care would be adversely affected," she said.
"Put simply, four babies under one or six under-twos is a lot for even the most experienced childcare worker to manage."
But new campaign group Childcare for All criticised the decision to abandon the changes.
Campaign founder Donna Edmunds said families on lower incomes and single parents were being priced out of the job market because of high nursery fees that she said were linked to strict regulation in the sector.
"We must move away from this idea that ever more stringent regulation equates to safety," she said.
"Ratios across Europe are more relaxed, yet quality of childcare is higher as nurseries can afford to pay their workers a better wage."
Statutory ratios for carers per child vary depending on age and setting.
Ratios for two-year-olds were going to rise from four children per adult to six children per adult, and for children aged under one from three children per adult to four children per adult.
Ratios for three-year-olds and over were to remain at eight or 13 children per adult, depending on whether a qualified graduate was present.
The government had said the changes were about raising standards and would bring the UK in line with countries such as France and Sweden. England's higher ratios had led to higher costs for parents and lower pay for staff, ministers had said.
Only nurseries that hired staff with higher qualifications were to be allowed to take on more children.