The council has been told by gas industry watchdog Ofgas that British Gas Trading which introduced the charge last April has now decided to withdraw it 'until further notice'.
Council leader John Battye welcomed the decision which comes after Oldham and other local authorities had voiced strong opposition to the charge - totalling more than£42 - because it would hit low income people in social housing hardest.
Cllr Battye said: 'This is a significant victory but we are also wary that the door remains open to British Gas to apply to Ofgas to re-impose the charge in the future.
Oldham opposed the charge because of the hardship it would bring to low income families relying on rented housing in the public and private sectors.
The council argued that the charge was unfair to new tenants as they would be forced to take on costs which were the result of the actions of previous tenants. It was also felt the imposition of an installation charge would result in delays in people taking up new tenancies.
The council found out about the charge in June last year when a new tenant was told by British Gas that a meter would only be installed in her home if she paid a charge of£42.01.
The property had previously had a meter but British Gas had removed it because of a debt incurred by a previous tenant.
During the summer 24 council tenants in the Oldham area had meters fitted and were required to pay the installation charge.
British Gas originally told the council that it had the agreement of Ofgas but it subsequently emerged that Ofgas had not been notified of the introduction of the charge.