A proposal that could have seen homeless people fined for sleeping in doorways in three coastal towns has been rejected.
But BCP Council's cabinet voted to stop it from going to public consultation.
Council leader Vikki Slade said they wanted to treat people "as humans" and "not vermin".
BCP council officers had recommended the PSPO to go out to public consultation to restrict drinking alcohol in public in an anti-social manner, possession, supply or use of drugs and behaviour causing harassment, alarm or distress.
But during an Overview and Scrutiny Board meeting last month, Tory councillors voted to recommend it should go further to include fines for begging, sitting in a public place with a receptacle to collect money from the public and leaving unattended bedding and bags.
Defending the proposal during the cabinet meeting on Wednesday, Conservative councillor Philip Broadhead said they did not want to target homeless people and it would be silly to "water down" the council's enforcement powers.
But Liberal Democrat council leader Mrs Slade said: "My job is to make sure we have fair policies that do not discriminate against any vulnerable people.
"I think that even if we ignore the reputational damage and financial risk to the council, in our hearts we know this wrong."
She added she would instruct the council to look at lockers for the belongings of rough sleepers and how other towns deal with professional begging.
It is planned for a BCP-wide PSPO to replace single ones across the local authority.
The cabinet vote also removed the controversial clauses fining begging, obstructing doorways and leaving belongings unattended from an existing PSPO in Poole introduced in 2018, which was contested with a High Court challenge by human rights charity Liberty.
Liberty lawyer Lara ten Caten urged the council to "implement the changes approved by the cabinet as a matter of urgency".
"We need this to mark the end of cruel and misguided parts of a PSPO intended to criminalise people simply because they're poor," she said.