George Osborne has scrapped planned cuts to tax credits for millions of low paid workers and ruled out further reductions in police budgets.
Unveiling his Spending Review in the House of Commons, the Chancellor said he could abandon the controversial tax credit cuts of £4.4 billion due to improvements in public finances.
He said he would still be able to deliver the promised £12 billion in welfare cuts over the next five years while balancing the books by the end of the Parliament.
To Tory cheers, he told the Commons: "I've had representations that these changes to tax credits should be phased in.
"I've listened to the concerns. I hear and understand them.
"And because I've been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether."