The Payments Council, a banking industry body, had been planning to replace the entire system of writing cheques by 2018 but, following widespread criticism, it has now decided they will be kept "as long as customers need them".
The Payments Council admitted it had been forced to change its mind by the weight of public opinion. Richard North, the chairman of the Payments Council, said: "Listening to over 600 stakeholder groups, working with the banks and following our appearance before the Treasury Select Committee, we have concluded we should reassure customers that the cheque is staying."
The industry's search for a "paper-based" alternative to cheques, announced only last year as a way of accommodating critics, has also been cancelled.
Scrapping cheques would have had serious ramifications for small businesses that rely on this payment method, but particularly in the antiques trade where they are an important alternative to carrying large amounts of cash. The stubs often act as an effective record of transactions when buying for stock.
Chip-and-pin portable handsets are used at a number of fairs already, but they are generally subject to a rental charge and there can be problems obtaining a signal, particularly in large venues.
A total of 1.1 billion cheques were issued by UK account holders in 2010 but this represented a fall of 70 per cent since 1990, with a further 40 per cent fall expected in the next five years.