Health campaigners have accused the government of putting lives at risk after ministers confirmed on Friday that they were shelving plans to introduce legislation forcing cigarettes to be sold in plain packaging.
Cancer Research UK said "lives will be lost" as a result of the decision, with Labour suggesting it was evidence of the Australian political consultant Lynton Crosby exerting undue influence on Downing Street.
When Andrew Lansley was health secretary, he said there was clear evidence that branded packaging encouraged people to smoke when he launched a consultation on the topic. Anna Soubry, the public health minister, said as recently as April this year that she was personally persuaded of the case for a plain packaging law.
But on Friday, Jeremy Hunt, Lansley's successor, told MPs in a written statement that the government had decided to postpone its plans to introduce plain packaging because it wants to study the impact the policy is having in Australia, the only country where it has so far been introduced. He would not say how long the government would wait, but ministers are not expected to revisit the idea until after the 2015 general election.
The announcement coincided with the revelation that the Home Office will make a statement next week confirming that the government would not be introducing a minimum price for alcohol, and that instead it will press ahead with less ambitious plans to stop alcohol being sold at below cost as a loss leader.
In his statement, Hunt said the consultation on plain cigarette packaging had shown that views on the proposal were "highly polarised" – with 53% of those providing detailed feedback in favour and 43% against – and that as a result "the government has decided to wait until the emerging impact of the decision in Australia can be measured before we make a final decision".
Downing Street is understood to be behind the decision to shelve plain packaging, which has been clearly heading for the Whitehall long grass ever since a bill on the topic was dropped from the Queen's speech. During the consultation there were claims that plain packaging legislation could cost jobs in manufacturing and in retail, encourage illegal tobacco trading and cost the exchequer up to £6bn, although on Friday the Department of Health would not say which of these arguments had proved persuasive.
Harpal Kumar, Cancer Research UK's chief executive, accused the government of caving in to the tobacco industry and of ignoring the interests of young people who, he said, were particularly susceptible to the influence of tobacco branding.
"This decision is bitterly disappointing and lives will be lost as a result. What's shocking is that more than 200,000 children start smoking every year in the UK," he said.
"All companies use packaging as a form of marketing. The tobacco industry relies on packaging more than most, since other forms of advertising and promotion are closed to it. The government had a choice: protect children from an addiction that kills 100,000 people in the UK every year or protect tobacco industry profits. We believe it has made the wrong choice."
The British Heart Foundation's chief executive, Simon Gillespie, said: "This was the chance for a real show of strength, courage and confidence but instead the government has capitulated in the face of industry pressure. Critical legislation that will help stop young people getting hooked on a lethal habit has now been left hanging in the balance."
Sarah Wollaston, the Conservative MP and former GP, responded to the announcement by posting on Twitter: "R.I.P public health. A day of shame for this government; the only winners big tobacco, big alcohol and big undertakers."
In a subsequent interview on the BBC's World at One, she partly blamed the decision on Lynton Crosby, the Conservatives' general election co-ordinator credited with telling David Cameron to "scrap the barnacles off the boat" – meaning that the prime minister should focus on core issues such as immigration and not waste political capital on more marginal concerns.
"One of those barnacles is today being buried at sea and that seems to be public health. I think that's very worrying," Wollaston said.
Labour also tried to pin some of blame on Crosby, focusing on his lobbying company, Crosby Textor, and the work it has done for the tobacco industry.
"The Tories used to say that they were in favour of this policy, that children should be protected. But now, not long after employing Lynton Crosby, David Cameron is backing down," said the shadow public health minister, Diane Abbott, who tabled an urgent question on the subject in the Commons.
"People will rightly wonder if the government is breaking its promise, despite the medical evidence and the wishes of British families, in order to please its friends in big business."
Responding to Abbott in the Commons, Soubry said that talking about Crosby was "a complete red herring" and that health ministers had not discussed the matter with him.
A No 10 spokesman said Crosby had no involvement in the decision. He also said that Cameron had never been lobbied by Crosby on cigarette packaging.
The government's decision was welcomed by groups including the Tobacco Manufacturers Association, the pro-smoking group Forest and the Petrol Retailers Associations.
In the Commons several Tory MPs warmly welcomed the government's move and Ian Paisley, the DUP MP, told Soubry: "You've protected 1,000 jobs directly in my constituency as a result of this and for that I am truly grateful."
But Soubry, who told MPs that her father died from lung cancer after a lifetime of heavy smoking, said she would not agree to Paisley's request for a meeting with those who manufacture tobacco. "It is bad, it is horrible stuff, it kills people, it does great damage to people's health," she said.
• This article was amended on 12 July 2013. It originally said the decision was welcomed by the pro-smoking group Ash. This group is anti-smoking; it was the pro-smoking group Forest that welcomed the decision. This has been corrected.
