The Department of Health has taken an unprecedented step in bowing to pressure from the insurance industry to revoke the Road Traffic (NHS Charges) Amendment Regulations.
Last week Insurance Times reported that the regulations, retrospective to 28 January, increased the maximum tariff paid by insurers from £10,000 to £30,000.
The Association of British Insurers (ABI) wrote to the department to protest about the lack of consultation over the charges and its retrospective nature.
Lord Hunt of the Wirral also raised the issue in the House of Lords.
On 7 February, when Insurance Times first broke the story, Undersecretary of State for the health department Lord Hunt of King's Heath announced that the government would revoke the regulations.
He attributed the back down to the representations from the ABI and Lord Hunt of the Wirral.
An ABI spokesman said the association was pleased the government listened "attentively and constructively" to the industry's concerns.
"It's a good example of the way the industry puts the case coherently and logically and the government listens," he said.
Lord Hunt of the Wirral paid tribute to the health department's swift response to the industry's concern.
He said this was the first time the government had ever revoked such regulations.
"The industry now looks forward to constructive dialogue," he said.
Insiders told Insurance Times that the government would reinstate the old tariffs before embarking on a consultation process.
The higher tariffs could be reintroduced later this year.