New pensioners will continue to get up to $7 a week to help pay power bills, with the federal government ditching plans to axe an energy supplement paid to welfare recipients.
Various coalition ministers in recent years have tried and failed to scrap the payment - which was originally offered as compensation for the defunct carbon tax - for incoming welfare recipients.
But Prime Minister Malcolm Turnbull said on Wednesday the government would no longer seek the change, which has been stalled in the upper house.
"With the issue of energy prices being so prominent, we will not move to repeal the energy supplement," he told reporters.
The government was hammered by Labor for trying to scrap the supplement during recent by-elections in the Queensland seat of Longman and Tasmanian seat of Braddon, both of which feature high levels of welfare dependency.
The prime minister on Tuesday told coalition colleagues the government was reviewing its stance on the so-called "zombie measure".
The payment means an extra $14.10 per fortnight for single pensioners, $10.60 per fortnight for those with partners and up to $9.50 per fortnight for other single people receiving allowances.
Treasurer Scott Morrison said the policy shift will not impact on the budget as it was accounted for in a contingency reserve.
Australian Council of Social Service chief executive Cassandra Goldie said the backflip was welcome as every dollar those on the lowest incomes get matters.
The payment may have been established to complement the carbon tax but it is still needed now energy prices have risen, she said.
Dr Goldie said she hoped the government continues on the same track by raising other welfare payments.
"It's an important opportunity for the government to reset its agenda," she told AAP.
