The controversial power to detain terror suspects for 28 days without charge will be allowed to lapse next week, reverting to 14 days, the Government announced today.
Home Office Minister Damian Green said the order, which expires at midnight on Monday, will not be extended.
The findings of a full review of counter-terrorism powers will be announced by Home Secretary Theresa May next Wednesday, including long-term plans for the terror detention regime.
But answering an urgent question in the Commons Mr Green said: "In the interim I can announce that the Government will not be seeking to extend the order allowing the maximum 28 day limit and accordingly the current order will lapse on January 25 and the maximum limit of pre-charge detention will from that time revert to 14 days."
There were cheers from MPs who opposed the detention regime as Mr Green made his announcement.
The order allowing the 28-day limit was extended for six months last year while the full review was carried out.
Mr Green said: "This Government is clear that the power to detain terrorist suspects for up to 28 days before they were charged or released was meant to be an exceptional power. This was always Parliament's intention.
"But under the last government it became the norm, with the renewal of 28 days repeatedly brought before the House.
"This was despite the power rarely being used. Since July 2007 no one has been held for longer than 14 days despite the many terrorists arrested since then.
"This is a testament to the efforts of our prosecutors, our police and our intelligence agencies."
He said the Home Secretary would next week "set out the detailed considerations of the Government in determining whether the current regime of 28 days should be renewed and if not what should be put in its place".
Mr Green continued: "We are clear that 14 days should be the norm and that the law should reflect this."
But he said emergency legislation would be drawn up and placed in the Commons library to extend the maximum period to 28 days "to prepare for the very exceptional circumstances when a longer period may be required".
If Parliament approved, the maximum period of detention could be extended again.
In her statement next week Mrs May will set out "contingency measures" which would "ensure that our ability to bring terrorists to justice is as effective as possible".
The country continued to face a "real and serious" terror threat which was "unlikely to diminish any time soon", Mr Green said.
"The Government is clear that we need appropriate powers to deal with that threat but those powers must not interfere with the hard-won civil liberties of the British people.
"There is a difficult balance to be struck between protecting our security and defending our civil liberties.
"The outcome of our counter-terrorism powers review will strike that balance."
Mr Green said the Government hoped the review would lead to a "lasting political consensus" on the issue.
Shadow home secretary Ed Balls said it was an "unusual constitutional position" that his urgent question had forced the Government to make the announcement.
Mr Balls said he agreed that keeping the public safe and balancing security with the protection of civil liberties was a "vital task facing any government".
But he was critical of the process leading to the announcement, claiming it was a "complete shambles".
And he attacked what he said were leaks to the media over various counter-terrorism measures.
Mr Balls questioned why Mrs May was not announcing the change to MPs.
He said: "I said we would support a change on the basis of the evidence. There has been no evidence, there is no details of contingency arrangements, we are told there will be a statement on Wednesday but the policy on 28 days collapses now by default on Monday."
He asked what would happen on Monday if a terrorist suspect was detained and asked if the security services had agreed to the change.
He added: "This is a deeply arrogant way for the Government to treat this House and it is a shambolic way to make policy on vital issues of national security."
Mr Green said: "I am very sorry I shot your fox before you stood up in what was clearly a pre-written statement which didn't bother with anything I actually announced.
"You asked a question and I gave a substantive answer - you seem to be objecting to that.
"I can understand why the very, very noisy and excited frontbench opposite is confused by this process, because under their government there was never any substantive answer to an urgent question.
"It clearly came as a huge shock to you that you had an answer because it was clear from what you said that you hadn't listened to any of it."
Mr Green said the Government was "not going to be driven by the media agenda" over its review of counter-terrorism powers.
He said he would "not take any lectures on counter-terrorism powers from the party that tried to use pre-charge detention as a political tool".
Mr Green added: "At every turn the Labour government trampled on civil liberties, not just on their attempt to impose 90-day detention, but their databases on children and their ID card scheme.
"No amount of sanctimonious bluster from the Labour Party can disguise their shocking record on civil liberties and security.
"This Government will repair their mistakes in that area."
Liberal Democrat Tom Brake (Carshalton and Wallington) asked: "Would you agree that the coalition's approach to counter-terrorism judiciously balances the country's security needs with the defence of our precious civil liberties, in contrast with the Opposition's which relied on draconian and counter-productive counter-terrorism measures which were highly damaging to fundamental British rights and ineffective from a security perspective?"
Mr Green said: "You are exactly right. We need to strike a new and better balance, not just in the interests of civil liberties, but in the interests of security as well."
Labour former home secretary David Blunkett (Sheffield, Brightside and Hillsborough) said: "I was the home secretary who increased the time from seven to 14 days and I do think there is good reason for a balanced and sensible approach.
"But why is that we are able to have one announcement of one part of the review without having evidence today, rather than the total review being announced?"
He suggested the reason was because Mrs May was in Budapest at an informal meeting as part of her duties within the EU.
Mr Green said: "Last week the Leader of the House said the Home Secretary was making a statement the following week ... so indeed you asked the correct question.
"We are doing this now because your honourable friend (Mr Balls) asked an urgent question and I shocked him by giving a substantive answer to it and I make no apology for that."
Keith Vaz, Labour chairman of the Home Affairs Select Committee, said: "There may be support for the substance of what you have said today, but I think what concerns the House is the fact that we have to wait for an urgent question to be asked before we have this information.
"It is unsatisfactory. The counter-terrorism minister was very clear to the select committee when she appeared before us, Parliament would be told first about these matters and it would not appear in the newspapers."
He called for the statement by Mrs May to be moved from next Wednesday to Monday: "That is a way to resolve this rather unfortunate state of affairs."
Mr Green said: "You will have heard me say that the statement has been long planned for next week and it was announced to the House that it was going to be then.
"On the issue of the fact that the deadline is Monday, it seems to me entirely reasonable that the law revert to what it was, it was a temporary emergency arrangement for six months which was going to lapse on Monday anyway.
"So to try and equate that with the wider counter-terrorism review isn't quite right."
Tory Julian Lewis (New Forest E) asked: "Can you explain why this welcome announcement appeared prematurely in so many media outlets at the same time?
"We always criticised this when we were sitting on the opposition benches, I would hope we would take firm action against leaks now that we are in government."
Mr Green replied: "I have no idea where that came from and I can only say to you that I have no idea because nothing to do with any of this has ever come out from me or from my office."
Labour veteran David Winnick (Walsall N) asked: "Will you accept that it is a welcome step that 28 days is being reduced to 14 days? The 28 days was never meant to be permanent and as far as party polemics are concerned, 90 days was defeated as a result of Labour MPs."
He asked why it was necessary to give the Home Secretary reserve powers, adding: "It should be 14 days without any powers given to the Home Secretary which wouldn't have the authority of the House of Commons."
Mr Green told him: "I should emphasise it will be a draft Bill only to be used in emergency circumstances which the House would of course have to approve at the time."
Mr Green told Tory Dominic Raab (Esher and Walton): "Nobody has been detained for more than 14 days since July 2007 despite the many terrorist outrages we have regrettably seen since then.
"To date, 11 individuals have been held for over 14 days pre-charge, six of these 11 people have been held for the maximum 28 days, three were charges, three were released without charge."
Labour former minister Kevin Brennan (Cardiff W) said: "There were arrests in Cardiff as you know, and charges in relation to terrorist activities before Christmas.
"Do you understand my constituents would welcome the retention of the possibility to extend to 28 days, albeit by a different method?
"Because had it been necessary in that case for public protection that would have been the right thing to do."
Mr Green said: "In relation to the arrests I think it is important to look at what has happened and since July 2007 no one has had to be held for more than 14 days despite the many terrorist actions and planned actions that have happily been stopped by the good action of the police and security forces."
Tory Edward Leigh (Gainsborough) said: "Can I urge you to put the safety of the British people first?
"I suspect that for most people in London if it is a choice between their daughters being blown up on the London Tube or a terrorist who hates everything we stand for spending 28 days in relative comfort before being charged I think they would choose the latter.
"So act on the evidence and put the safety of the people first."
Mr Green said public safety "had to be balanced against the wider civil liberties that both you and I hold dear".
Tory Philip Hollobone (Kettering) said: "Her Majesty's Government is not treating Parliament properly with regard to this issue. Presumably the Home Secretary is back in the House on Monday to take questions to the Home Office.
"It would be perfectly possible for her to make a statement then."
Mr Green replied: "As you say, those who are eager to question the Home Secretary have the chance to do so on Monday."
Outside the Commons, Shami Chakrabarti, director of Liberty, said: "A month's detention without knowing why is shamefully long for any democracy.
"The Government is to be congratulated for reducing this period. However control orders allow punishment without charge not for months, but for years on end.
"It would now be completely contradictory not to scrap this even greater embarrassment."
Alex Deane, director of the civil liberties campaign group Big Brother Watch, said: "This is a good day for freedom. Finally, this Government is delivering some of what they promised.
"The debate should now be about whether the limit should go lower than 14 days without charge - I firmly believe that it should."