Chief Executive Leung Chun-ying says the controversial guidelines for national education will be shelved - but not scrapped outright.
He made the announcement yesterday, 11 days after a government panel recommended "invalidating" the guide.
Controversy over the subject, aimed at instilling in pupils a sense of belonging towards the motherland, had polarised society and hindered school operations, Leung admitted.
"I hope [the policy change] can … rebuild mutual trust in society," he said at the Chief Executive's Office in Admiralty.
Shelving of the guidelines, handed to schools in April, means they can decide what is taught and choose their materials, which would not be subject to the Education Bureau's approval. Leung refused to answer questions such as whether he had bowed to public pressure and whether it was a political setback for him.
The Civil Alliance Against National Education hailed the "achievements of a civic society" and said the move would mean most public schools would not go ahead with the lessons.
Anna Wu Hung-yuk, chairwoman of the Committee on the Implementation of Moral and National Education, said at noon that its formal report to the chief executive would recommend the guidelines be shelved due to "continuing unease". But she did not mention the term "invalidate", which she used after a meeting on September 27.
It is understood her choice of the word drew criticism from some committee members, who said it would mean schools that started the subject had no reference as a guide.
Wu said the committee agreed national, moral and civic education was an important part of a pupil's life, so the subject should not be scrapped. Schools should be allowed to teach it if they decided to. She also said the decisions were supported by most members, with two abstaining votes.
The government's phased voluntary introduction of the subject was to have started last month in primary schools.
It would have become compulsory at public primary and secondary schools, by 2016 at the latest. But critics branded the subject a move to indoctrinate future generations in Hong Kong, with topics presenting a biased view of mainland China.
Leung backed down on the compulsory introduction of the subject on September 8, allowing schools the choice to run classes.
The climbdown was announced after 10 days of protests last month that culminated in an "Occupy Tamar" rally of tens of thousands at the government's offices. More than a dozen activists went on a hunger strike at a camp and thousands of university students boycotted classes.
Beijing loyalist Fanny Law Fan Chiu-fun maintained yesterday that national education was necessary for students to know more about the motherland.
Wong Hak-lim, vice-chairman of the Hong Kong Professional Teachers' Union, said national education had been effectively scrapped because schools did not necessarily need to launch it and the guidelines were no longer mandatory.
Eva Chan Sik-chee, co-founder of the Parents Concern Group on National Education, said she believed some schools would still teach it. " We hope the schools will choose and make suitable teaching materials, and at the same time consult the opinions of parents," she said.
A few schools, which said they would still introduce the subject, said balanced views and material would be presented to pupils.
Leung Kee-cheong, principal of the Fresh Fish Traders School, said: "We will teach the good side of the country to make students proud, but we will also teach students the dark side of the country to make students committed [to China's future development]."
Leung Siu-tong, principal of Wong Cho Bau School in Tung Chung, said it would still use the guidelines. "Shelving means one can still take it from the bookshelf," he said.