The broadband tax has been scrapped in the last-minute scramble to rush key legislation through before Parliament is dissolved next week.
The tax was a key part of Labour's strategy to ensure all parts of the country get super-fast broadband.
The Conservatives have always opposed the tax, preferring to allow the market more time to roll out services before government intervention.
The levy was among three taxes in the Finance Bill to be dropped.
The 10 per cent tax increase on cider and tax relief on holiday homes were also scrapped.
The 50p-a-month broadband tax would have been applied to all households with a landline telephone. It is estimated that it would have raised about £170m a year to help fund broadband roll-out.
It was aimed at the final third of the country that experts say would be too expensive for commercial players such as BT and Virgin Media to roll out fibre services.
But the tax proved controversial and the Conservatives had vowed to scrap it if it had become law and they had won the election.
The cross-party Business Innovation and Skills committee of MPs had labelled the tax unfair, because most of those who would pay it would not benefit from it.
It is likely to be reinstated if Labour is re-elected in the 6 May general election.
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