An equality law dubbed "socialism in one clause" will be scrapped, Home Secretary Theresa May said today.
The measure was intended to force public authorities to take into account disadvantage and inequalities when making decisions about policies.
But Mrs May, who is also the equalities minister, said in reality it was just another bureaucratic box to be ticked.
Harman's Law, named after the Labour deputy leader Harriet Harman who introduced it under the previous government, could have meant public spending would have been skewed towards certain parts of the country with public services being closed down in some areas to be reopened in others, Mrs May said.
Bin collections and bus routes would have had to be designed "not on the basis of practical need but on this one politically-motivated target".
Mrs May said the previous Labour government "thought they could make people's lives better by simply passing a law saying that they should be better".
"That was as ridiculous as it was simplistic and that is why I am announcing today that we are scrapping the socio-economic duty for good," she said.
"We shouldn't just compensate people for the barriers to opportunity that they face, we should take action to tear down those barriers altogether."
But it is still unclear whether the Government will go ahead with Labour legislation which would require employers to disclose whether they pay women as much as men.
Mrs May said: "Decades after equal pay laws were passed the full-time gender pay gap for women stands at over 12%, increasing to 22% if part-time employees are included."
Asked what her plans were, she said the public would have to wait for a further announcement in the future.
But she added: "There will be something coming through on that."
Only about 90% of the Equality Act came into force in October, with the remainder put on hold as the Government reviewed several sections of the legislation passed by Parliament in April.
The Government's failure to implement the Act in full "undermines every speech coalition ministers ever gave endorsing the notion of a fairer Britain", campaigners said.
The Fawcett Society, which campaigns for gender equality, said failing to bring in the powers was "tantamount to endorsing the shocking gender pay gap".
Mrs May said the previous Labour government "stopped treating people like individuals and instead viewed them as part of some amorphous herd".
The coalition Government will stop dictating to people how they should behave, she said.
Among the measures outlined today, she said the Government will extend the right to request flexible working to everyone, not just parents and carers.
And she announced plans to make it possible for those with old convictions for consensual gay sex to apply for their record to be deleted from the police national computer.
But in a controversial introduction to the Home Secretary's speech, leading gay rights campaigner Ben Summerskill joked about the royal engagement.
"It's a very special day, of course, we're all celebrating Prince William's engagement," he said.
"I'm going to try to remember exactly who's partnered with whom. I think it's Katie Middleton with Prince William and Chelsy Davy with Prince Harry - and there's also Sir Noel Coward with the late Duke of Kent."