The SNP called on ministers to come up with firm proposals to safeguard shopworkers' wages if Sunday trading laws are relaxed - as the Scottish National Party claimed to have forced ministers to put policy put on hold.
Westminster leader Angus Robertson said an SNP threat to help vote down the reform appeared to have prompted the Government to consider criticisms before seeking parliament's approval.
Downing Street denied any U-turn, saying it was considering the results of a consultation before setting out its next steps "in due course" as planned.
Pressed on whether the Government had dropped plans to put the issue to a vote within days, the Prime Minister's official spokeswoman said: "We have been clear on what the process is."
Chancellor George Osborne outlined proposals in the Budget earlier this year that would devolve powers to set Sunday trading rules to local councils and mayors.
Currently large stores and supermarkets can only open for six hours on Sundays.
The SNP was convinced by shopworkers' union Usdaw that retailers would fund extra opening hours by cutting the wages paid on Sundays across the UK.
It indicated yesterday that it was ready to join forces with Labour and around 20 Tory rebels to block the changes amid fears they could drive down the wages of workers in Scotland, which already has Sunday opening.
Mr Robertson said: "This is yet another example of the SNP operating as the effective opposition at Westminster.
"SNP MPs have been in talks with Usdaw, and shop workers across the UK, who have contacted us about their concerns that these proposals would have resulted in pay cuts to low-paid workers, many of whom are already suffering from George Osborne's cuts to tax credits and other in work support.
"We are very pleased that the UK Government now appear to have pulled their plans, fearing defeat in the Commons. It is vital that the Government now goes away and brings forward firm proposals for safeguards and guarantees to ensure shop workers are not left worse-off following any changes to Sunday trading.
"The SNP are supporters of Sunday trading - we think in principle it is a good thing - but we are clear that it should not be happening on the back of often low paid shop workers in Scotland and throughout the UK."
John Hannett, general secretary of Usdaw, which opposes relaxation, said: "This week we called for the Government to step back from their proposed changes to Sunday trading and we are delighted that they have listened.
"The Sunday Trading Act is a great British compromise, which has worked well for over 20 years and gives everyone a little bit of what they want. Retailers can trade, customers can shop, staff can work; whilst Sunday remains a special day, different to other days, and shopworkers can spend some time with their family."
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