A plan to link public sector pay to location was strongly criticised by Labour and some Conservatives.
Liz Truss has backtracked on her plan to link public sector pay to local living costs.
The Conservative leadership candidate had said she wanted to introduce regional pay boards in a bid to save a potential £8.8bn.
However, there was a backlash to the policy from several senior Tories.
And the Truss team have now said “there will be no proposal taken forward on regional pay boards for civil servants or public sector workers”.
A spokesperson for the leadership hopeful said there had been “a wilful misrepresentation of our campaign”.
They said: “Current levels of public sector pay will absolutely be maintained. Anything to suggest otherwise is simply wrong.”
Announcing the policy on Tuesday morning, Ms Truss said she wanted “a leaner, more efficient, more focused Whitehall” and set out plans which suggested savings of £11bn a year.
This included £8.8bn which would come from introducing regional pay boards, meaning that civil servant pay – and potentially later other public sector workers – could be adjusted to reflect the area where civil servants work.
In addition to saving money, the Truss camp also argued it would help boost growth in areas, where the private sector had been crowded out by public sector salaries.
However, the proposal met with strong resistance from some Conservatives including Tees Valley mayor Ben Houchen who said it was “a sure fire way to lose the next general election”.