Government plans to claw back NHS costs from employers' liability compulsory insurance (ELCI) have been put on hold.
The Department of Trade and Industry minister Nigel Griffiths said the plans would not be implemented.
Liberal Democrat small business spokesman Brian Cotter attacked the government for proposing the new laws before assessing their impact on small businesses.
Cotter said: "Labour cannot adopt a 'damn the consequences' approach to legislation that could increase insurance premium costs to British business by as much as 8% according to an ABI report.
"The government's rethink is welcome, but new laws cannot be adopted on an act now, think later basis. The NHS charges provisions in the Health and Social Care Bill should be scrapped, not just delayed."