The French government is abandoning a fuel tax hike that was previously only suspended for six months following violent protests, Prime Minister Edouard Philippe told lawmakers on Wednesday.
"The government is ready for dialogue and is showing it because this tax increase has been dropped from the 2019 budget bill," he told the lower house of parliament.
The government had earlier on Wednesday said it would not change the version of the budget bill currently at the Senate, which had dropped the fuel tax increase.
While Philippe made it clear in parliament that it would not be in the budget bill, he did not say whether it would be later included during the course of 2019 in a budget update.
It is President Emmanuel Macron's second climbdown in the face of the Yellow Vest protest movement that has seen roads blocked around the country since last month and riots in Paris on two Saturdays running.
Macron's government has seemed at a loss to respond to the leaderless protest movement, named after the yellow high-visibility road safety vests the demonstrators have adopted as a uniform.
The 40-year-old president is known to dislike acting under pressure and has successfully pushed reforms through to labor laws and the state railway company in the face of street protests.
Until this week, Macron had promised consultations and measures to aid poorer motorists but insisted the tax rises were needed to fight climate change and shift the tax burden from workers' incomes to sources of pollution.
But the widespread nature of the Yellow Vest movement, its public support - gauged at 70 percent or more in multiple opinion polls - and the scenes of violence have changed the equation this time.
In comments relayed earlier by government spokesman Benjamin Griveaux, the president had struck an unusually alarmist tone, warning of an "unprecedented" situation and "great violence."
More than 100 people were injured and 412 arrested in Paris on Saturday, with cars burning and clouds of tear gas spreading as rioters fought police for control of upmarket streets around the Arc de Triomphe.
Macron told ministers at a weekly government meeting that some of those involved in the protests had no intention other than to "attack the republic," Griveaux said.
The president asked everyone, including rival political parties, trade unions and employers, to "launch a clear and explicit call for calm and for respect of the republican order," Griveaux said.
Macron has not spoken directly to the public since returning from the G20 summit in Argentina after Saturday's riots, although on Tuesday he visited a government building that was partly burned during unrest in a provincial town.
Philippe told the National Assembly that it was time to have a national discussion on the issues raised by the protests, including the full range of taxation policy and public services.
Everybody was in favor of less tax, but if they were asked whether they wanted fewer public services as well, the answer was more complicated, he argued.
But, speaking before the Elysee confirmed the tax rises were off the agenda for 2019, the head of the biggest opposition group slammed the government's moratorium as "almost a provocation."
"None of the measures you have announced will make this pill go down," Christian Jacob of the conservative Les Republicains party told Philippe during a debate on the issue called by the government.
And radical leftist leader Jean-Luc Melenchon, who like far-right leader Marine Le Pen has been outspoken in his support for the Yellow Vests, was even more trenchant.
"Happy are these days, for France has at last entered a state of general insubordination against an unjust order that has lasted too long," Melenchon declared, before taking a swipe at Macron and his attachment to business and technology start-ups.
"No, France is not a start-up run by a little genius," he declared. "We are a great nation, educated and politically aware, of 65 million people who have had enough of being taken for fools."
Earlier, the leader of Les Republicains, Laurent Wauquiez, called for a state of emergency to be declared ahead of Saturday's expected protests.
"That would enable the security forces to be protected and it would also enable us to protect those who want to march peacefully without being taken hostage," Wauquiez told France 2 television.
