David Blunkett, the Education and Employment Secretary, said the so-called progress measure, due to be published in two weeks time, would be unfair to a significant number of schools.
His decision was immediately branded a "humiliating U-turn" by Conservatives. But head teachers welcomed the climbdown, declaring it a victory for "well argued professional opinion".
The row centres on a new measure designed to show how much progress pupils have made between national English, maths and science tests at 14 and their GCSEs.
The progress measure would have compared the GCSE results of schools which recorded similar results in the national tests for 14-year-olds, known as Key Stage Three tests. Schools would have been awarded a grade from A to E depending on whether the school did better or worse than others with similar Key Stage Three scores.
But head teachers were angry last month after receiving details of their grades. They were furious that many schools where all or most children achieve at least five good GCSEs would have been graded near the bottom of a five-point scale because pupils had done so well two years earlier.
Now the tables will simply record a "tick" for the 800 schools recording higher than average GCSE results compared with their performance in the national tests. Mr Blunkett decided to drop the new measure after reviewing the grades given to a series of successful schools.
He is understood to have decided that the measure would have discredited efforts to introduce a full-blown "value added" system of performance measures assessing the progress made by each pupil.
Mr Blunkett said: "We have listened to the concerns expressed by schools with good GCSE and Key Stage Three results in particular and have decided that the most robust available measure of a school's improvement in the tables should remain the school performance index this year."
But Mr Willetts said: "This is a humiliating U-turn. The Government claimed this measure was going to identify schools which are coasting and denying their pupils the success they should be getting. What has happened to that claim now?"
Government sources insisted that dropping the new measure would have no impact on the drive to improve coasting schools. Work on a fully fledged measure of the "value added" by schools would continue.
David Hart, general secretary of the National Association of Head Teachers, said: "I think the volume of the postbag from head teachers will have been important. this is evidence that the Government is prepared to listen to well argued professional opinion given by the people who lead schools."Reuse content