French Prime Minister Edouard Philippe has announced a suspension of fuel tax and utility hikes in an effort to appease a protest movement that has swept across Paris.
Mr Philippe said the planned increase, which has provoked violent riots and was set to be introduced in January, will be suspended for six months.
He said “no tax is worth putting the nation’s unity in danger”.
More than 100 people were injured in the French capital and 412 arrested over the weekend during France’s worst urban riot in years, with dozens of cars set alight.
The Arc de Triomphe, which is home to the Tomb of the Unknown Soldier and was visited by world leaders last month to mark the centenary of the First World War, was sprayed with graffiti and vandalised inside during the protests.
The commitment, made in a televised address, came just three weeks after Mr Philippe insisted that the government would not change course and remained determined to help wean French consumers off polluting fossil fuels.
“This violence must end,” Mr Philippe said.
He also announced that electricity and natural gas prices will be frozen until May 2019 in a move aimed at improving spending power.
Mr Philippe’s announcement is unlikely to put an end to the road blockades and demonstrations, though, with more possible protests this weekend in Paris.
A football game between Paris Saint-Germain and Montpellier which was scheduled for Saturday in Paris was postponed after police said they could not guarantee security amid expected protests in the capital.
Mr Philippe said: “If another day of protests takes place on Saturday, it should be authorised and should take place in calm. The interior minister will use all means to ensure order is respected.”
On Tuesday, protesters kept blocking several fuel depots and many insisted their fight was not over.
“It’s a first step, but we will not settle for a crumb,” said Benjamin Cauchy, a protest leader.
Prominent Socialist Party figure Segolene Royal, a former candidate for president, lauded Mr Philippe’s decision but said it came too late.
She said: “This decision should have been taken from the start, as soon as the conflict emerged. We felt it was going to be very, very hard because we saw the rage, the exasperation, especially from retirees. They should have withdrawn (the tax hikes) right away. The more you let a conflict fester, the more you eventually have to concede.”
Far-right leader Marine Le Pen lashed out at the decision as too little, tweeting that it was “obviously not up to the expectations of the French people struggling with precarity”.
After a third consecutive weekend of clashes in Paris led by protesters wearing distinctive yellow traffic vests, Mr Philippe held crisis talks with representatives of major political parties on Monday. He also met with French President Emmanuel Macron and other ministers in order to find a quick solution to the crisis.