Plans to scrap free milk for children under five will not go ahead, Downing Street has said.
It comes after UK Health Minister Anne Milton set out the proposals in a letter to Scottish Public Health Minister Shona Robison.
Downing Street said Prime Minister David Cameron "did not like" the idea of scrapping the free milk scheme.
Shadow health secretary Andy Burnham said the "chaos" was "shambolic" and undermined the PM's ministers.
The Nursery Milk scheme allows children under five in approved day care to receive 189ml (1/3 pint) of milk each day free of charge.
The scheme dates back to 1940, when milk was issued to pregnant women and young children to protect them against wartime food shortages.
'Ineffective universal measure'
Mrs Milton had said the milk scheme was too expensive, and the government was considering increasing the value of Healthy Start vouchers for the poorest families instead.
The health minister, who said there was no evidence the scheme improved health, wrote that the government was looking at abolishing the scheme by April 2011.
She admitted ending the scheme was "highly controversial" but said the programme did not "provide value for money in difficult times" and had "become increasingly outdated".
The cost of the scheme had almost doubled in the last five years, she said.
Running the scheme in England this year cost nearly £50m and would rise to £59m in 2011-12, she added.
The intervention left Universities Minister David Willetts floundering in a television interview on the BBC One's Andrew Marr Show, when he initially said ending the provision was on the table along with "a whole range of options" - only to be informed on air that it had been ruled out.
Later, the Department of Health said ending the scheme was an option that had been "considered" but it had "decided to rule it out".
Shadow health secretary Andy Burnham said: "Scrapping free milk for under-fives was clearly a firm policy proposal, otherwise the Public Health Minister would not have been writing to her counterparts in the devolved administrations.
"For the prime minister to undermine his ministers in this way - astonishingly while one is live on air in the middle of a TV interview - reveals the true extent of the policy chaos within his government.
"What prompted him to act in this bizarre way seems to have been the fear of being compared to Margaret Thatcher rather than the policy itself. It is no way to conduct government business."
The Scottish National Party said Mrs Milton should consider her position, with Scottish Health Secretary Nicola Sturgeon saying the minister had been over-zealous.
"She's proposed something David Cameron has immediately stamped on, that's hardly a vote of confidence," said Ms Sturgeon.
"I think it would have been deeply, deeply damaging for nursery school children to have had the milk that they get removed. I believe that there is evidence that milk in a child's development is very important.
"So the substance of the issue is vital. I'm glad that David Cameron has said he won't pursue this, and I hope very much that this remains the case."
But a Downing Street spokesperson said: "We have full confidence in Anne. She is very good minister, who was doing her job to come up with savings."