The Pennine Acute Trust had planned to make mothers at the Rochdale Infirmary buy £5 tokens which could be traded in for a pack of 10 bottles of formula and teats.
A spokesman for the trust said: "The decision has been rescinded."
The U-turn comes after criticism from hospital staff, one of whom described the cost-cutting scheme as "appalling".
Councillor Jean Ashworth, who works as a senior healthcare assistant on the hospital's children's ward, said: "This is excellent news.
"It's people power in action - and power to the little babies that deserve the milk.
"They have had a change of heart and listened to our concerns.
"Obviously it wasn't going to work and it would have caused an awful lot of problems.
"They'll have to stand by this decision now and not try and bring it in at a later date."
The scheme, which was estimated to save the trust about £30,000 a year, had been due to come into place in March.
The trust had claimed that charging mothers for formula milk would encourage breastfeeding - a claim Ms Ashworth challenged.
"It's nothing to do with breastfeeding. If they're saving £30,000 then I'm sure that's behind it.
"If for any reason whatsoever the mum can't breastfeed, they shouldn't be penalised for having to pay to feed their babies," she said.
The Pennine Acute Trust declined to comment further.
Cathy Warwick, from the Royal College of Midwives, said: "We welcome and support this decision because we do not want some women to be disadvantaged financially when in hospital.
"However, we should be doing all we can to encourage women to breastfeed and I know the Trust and the midwives are hugely committed to doing this.
"This means making sure that midwives have the time to discuss breastfeeding with women, and the time to give them the support and guidance they need.
"When this happens, breastfeeding rates increase and the demand for formula milk falls."
You need Flash player 8+ and JavaScript enabled to view this video.
460
275
0
false
Tweet

Esso Blue, Manchester (20/11/2008 at 19:46)