Education Secretary Michael Gove has been forced to abandon his flagship plan to scrap GCSEs and replace them with a new English Baccalaureate.
The move follows pressure from the Liberal Democrats and criticism from across the political spectrum, teachers and regulators.
And it comes days after the cross-party Commons Education Committee said the Government had "not proved its case" that GCSEs should be abolished in key academic subjects.
Labour branded it a "humiliating climbdown" for Mr Gove, who is one of the most high-profile members of the Cabinet and had been seen as a potential future Tory leader.
The Education Secretary will make a statement to the Commons later where he will insist he is still working to toughen up the exam system.
He had originally wanted to introduce the new EBacc certificate in England in the five core academic areas of English, maths, science, languages and humanities - history or geography.
Each of the core subjects would have been handed to a single examination board - a move he argued was essential to prevent boards "dumbing down" standards to attract more schools.
However, officials warned the plan could fall foul of EU procurement rules.
It is the second time the Liberal Democrats have blocked Mr Gove's reforms after they vetoed plans to replace GCSEs with a two-tier exam system last year.
Moves to cut the role played by coursework at GCSE level and changes to the national curriculum will go ahead.
Shadow education secretary Stephen Twigg said Mr Gove should have listened to warnings that the scheme would not work.
"This is a humiliating climbdown from Michael Gove," he said. "It shows why he should have listened to business leaders, headteachers and experts in the first place and not come up with a plan on the back of an envelope.
"Pupils and parents need certainty now. Michael Gove must now make clear whether he will abandon his narrow, out of date plans altogether or merely try to delay them.
"He needs to go back to the drawing board and develop a curriculum and exam system that meets our future challenges as a country.
"Labour wants to work with the Government to forge a long term consensus on exam and curriculum reform. We would welcome cross party talks."
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