The proposal was due to be fast-tracked through both houses of parliament and implemented by the end of last month without consultation with retailers.
Upon learning of the proposed change, the Association of Convenience Stores (ACS) and British Retail Consortium immediately wrote to Secretary of State for Justice Jack Straw to protest that the move had not been communicated to the industry and would significantly alter enforcement activity.
The government has now indicated that it will consult with the trade before deciding whether to continue with the plans.
ACS chief executive James Lowman said: “We welcome the fact that government has taken the decision to withdraw the legislation and will now take time to consult widely. We look forward to playing a full part in consultation on this measure.”