Plans for new regulation of private landlords are being scrapped, housing minister Grant Shapps said today.
Mr Shapps told the Commons the private rented sector was already governed by a well-established legal framework and the new Government did not believe further regulation was necessary.
But the Association of Residential Lettings Agents (Arla) said it was "extremely disappointed" by the Government's decision, saying tenants were not being adequately protected.
Mr Shapps said: "With the vast majority of England's three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.
"So today I make a promise to good landlords across the country: the Government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.
"But for the bad landlords, I am putting councils on alert to use the range of powers already at their disposal to make sure tenants are properly protected."
A spokeswoman for The Department for Communities and Local Government said the previous administration proposed new regulation last year in response to the Rugg Review of the Private Rented Sector published in October 2008.
She said the new coalition judged the introduction of a National Register of Landlords, regulation of letting and managing agents and compulsory written tenancy agreements would introduce too much additional red tape.
Ian Potter, Arla's operations manager, said: "We are extremely disappointed with the housing minister's decision to scrap the previous Government's plans for the regulation of letting agents.
"This move risks seriously hampering the improvement of standards in the private rented sector, the sector's reputation, and the fundamental role it plays in the wider housing market as well as failing to protect the consumer who has nowhere to go when there is service failure or fraud.
"A minimum requirement must surely be consumer redress and protection of all funds taken from the public not just tenants' deposits.
"We have long campaigned for the introduction of compulsory regulation of letting agents, along the same lines as our own member-led licensing scheme launched last year. Currently, any person or organisation can become a letting agent.
"Until that is changed via national regulation, unprofessional, unqualified and unethical operators will continue to exist, to the detriment and expense of consumers and the market as a whole.
"The only option now is for the consumer to look for an agent which has signed up to voluntary redress and has client money protection; by doing so they would at least have a degree of protection not offered by many agents operating on the high street.
"We note however that the minister has not closed the door and look forward to the opportunity to have meaningful dialogue with him in the future."