The Chancellor will not press ahead with the so-called 'pasty tax' after agreeing the plans were too complex and burdensome to business, according to reports.
The Daily Telegraph reported pasties and other bakery items will no longer attract VAT if they are "cooling down" after being taken out of the oven.
The government had planned to put 20% VAT on any food served above ambient temperature to address an "anomaly" in the tax system.
The move attract wide-spread criticism and protests from bakeries, who said it was a tax on working-class Britons.
The Financial Times said the climb down was a new sign of the unravelling Budget.
The paper said in another concession to 'middle Britain' the proposed tax on static holiday caravans would also be reviewed.
Rachel Reeves, Labour's shadow chief secretary to the Treasury told the paper the concessions were further evidence that the Budget was a "a total and utter shambles".
Q2 net sales dropped almost 50%
‘Important to have an anchor’
Lack of innovation for solutions
Some 2,000 consumers affected