The controversial youth employment law that sparked weeks of protests in France will be scrapped, French president Jacques Chirac has announced.
He said the First Employment Contract, or CPE, would be replaced by other measures to tackle youth unemployment.
The law introduced a new work contract for under-26-year-olds allowing a two-year trial period, during which employers could end a contract without explanation.
Millions of students and union members have taken to the streets over the past month to protest against the law, with demonstrations often becoming violent.
The plan to replace the law was announced after a meeting between the president, prime minister Dominique de Villepin and other senior ministers on Monday.
De Villepin, who has repeatedly refused to back down over the law, said he regretted that the proposed measures, which had aimed “to provide opportunities for thousands of young people”, had not been fully understood.