The Policing and Crime bill, which contained the proposals, is due to receive its first reading today.
But in an interview with The Guardian , home secretary Jacqui Smith said the government would be “stepping back” from the plans for direct elections.
The announcement was met with widespread relief in local government but Andy Sawford, chief executive of the Local Government Information Unit think tank which has campaigned against the proposals, warned against “throwing the baby out with the bathwater”.
“We mustn’t let the debate on governance and accountability go away,” he said. “The government came up with the wrong solution and I’m pleased it’s been dropped.”
The deputy director of New Local Government Network, Anna Turley, said she was pleased the government was looking again at the issue.
"While we are keen to see greater local accountability in policing, these proposals would have dangerously undermined the importance of existing locally elected representatives in tackling crime and protecting the public."
Dr Rick Muir, Senior Research Fellow at the Institute for Public Policy Research, was disappointed the Government had delayed plans to make police authorities more accountable.
"There is now a real danger that nothing will be done to make policing more accountable to local people. Having apparently rejected direct elections for police authorities, the Government should act to give local councils a greater say over local policing priorities."
Ms Smith revealed former home secretary David Blunkett will prepare a report on how to achieve consensus within the Labour party on how to make the police more accountable.
However, the report will simply feed into Labour’s next general election manifesto, effectively ruling out any movement in this parliament. Mr Sawford said any possible resulting legislation would be five years away.
The campaign against the proposals was led in recent months by the Local Government Association’s Labour group. Officials within the group attributed the success of their campaign to building a coalition of opposition amongst Labour councillors and MPs as well as police chiefs.