Unveiling his Spending Review in the House of Commons, George Osborne said he could abandon the controversial cuts of £4.4bn because public finances have improved.
He said he would still be able to deliver the promised £12 billion in welfare cuts over the next five years while balancing the books by the end of the Parliament.
To Conservative cheers, he said: "I've had representations that these changes to tax credits should be phased in.
"I've listened to the concerns. I hear and understand them.
"And because I've been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether."
James Mildred, spokesperson for CARE, told Premier: "It means that hard working families who were set to lose out financially now have welcome relief and in the run up to Christmas that is going to be doubly welcome."
"This is all about the need to support and uphold families as a vital part of a flourishing society and we felt that the Chancellor's plans were going to negatively impact hard working families. They were set to miss out to the tune of up to 1,400 pounds.
"The problem that we had was not so much with the cuts in themselves but the fact that [George Osborne] was planning to cut tax credits and yet was failing to introduce any allowances within the tax system that would have compensated these families."
The Chancellor's Autumn Statement protected police budgets but student maintenance grants for the poorest are to be replaced with loans.
Listen to Premier's Alex Dibble speaking to James Mildred: