The Government has dropped plans to extend Sunday trading hours after suffering an humiliating Commons defeat at the hands of Tory rebels, Labour and the SNP.
Some 27 Conservatives joined forces with opposition parties to defeat the proposals by a margin of 317 to 286.
Ministers had engaged in increasingly desperate efforts to head off the clash, with David Cameron personally trying to woo doubters after the Speaker refused to accept a last-minute compromise amendment.
Business Secretary Sajid Javid said he had "respect" for those who opposed the move on principled grounds but accused the SNP of "childish and hypocritical" behaviour - pointing out that looser trading rules were already in place in Scotland.
He stressed that a majority of English and Welsh MPs had supported the plans, which would have given councils powers to allow larger shops to open for more than the current six hour maximum on Sundays.
"It was denied because of the SNP," he told the House. "The only thing the SNP was interested in today was headlines."
Asked outside the chamber whether ministers would seek to bring the measures forward again, communities minister Brandon Lewis said: "We have to respect the will of the House."
It is the second Commons defeat for the Government since the general election, after an attempt to amend EU referendum purdah rules was beaten back last September.
In theory, Mr Cameron has a working majority of 17. But some 27 Tories rebelled on the issue, including two who acted as tellers in the vote. They cited concerns about pressures on families, religious practices and the impact on smaller shops.
Backbencher David Burrowes, who tabled the killer amendment, said he did not feel a sense of triumph at defeating the Government.
"I suppose the emotion is more one of relief," he told the BBC.
Shadow business secretary Angela Eagle said: "Labour led the charge against the Government's plans to deregulate Sunday trading and were joined by other opposition parties and Tory backbenchers; we support the current arrangements which work well and mean retailers can trade, customers can shop, and shop workers can spend time with their families.
"I warned the Government that unless they pulled their plans then they would face a public and humiliating defeat on the floor of the House of Commons. That is exactly what we have delivered."
Usdaw general secretary John Hannett said: "This is a huge victory for shop workers and all those who value the special nature of Sundays and we are grateful to MPs from all parties who supported our campaign and voted against the Government this evening.
"We hope now the Government will leave this great British compromise alone and focus on providing real support for the retail sector not the unwanted and unnecessary bureaucracy that devolution would have resulted in."
Ministers had tried to win over sceptics at the 11th hour by mooting a pilot scheme instead of wider changes.
When they were blocked from bringing the plan to the floor of the House they suggested it could be tabled in the Lords later if the rebel amendment was rejected.
The Business Department had argued that extending Sunday trading hours for larger shops - classed as 280 square metres or more - could benefit the UK economy by an estimated £1.5 billion or more over 10 years. Smaller shops are not currently subject to the restrictions.