Fuel tax rises which had led to weeks of violent protests in France have been suspended for six months.
PM Edouard Philippe said that people’s anger must be heard, and the measures would not be applied until there had been proper debate with those affected.
The protests have hit major French cities, causing considerable damage for the past three weekends.
The “gilets jaunes” (yellow vest) protests have now grown to reflect more widespread anger at the government.
Three people have died since the unrest began and the resulting violence and vandalism – notably when statues were smashed at the Arc de Triomphe in Paris last Saturday – have been widely condemned.
“Yellow vests” are so called because they have taken to the streets wearing the high-visibility yellow clothing that is required to be carried in every vehicle by French law.
The movement has grown via social media and has supporters across the political spectrum.