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A spokesman for the trust said: "The decision has been rescinded."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."
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Showing comments 1 to 6 and replies | View All
Esso Blue, Manchester (20/11/2008 at 19:46)
Trudy, Bolton (21/11/2008 at 08:54)
Deeplish Lass (21/11/2008 at 14:59)
When I asked for help as my baby would not keep milk down I was told thats normal as the midwife walked off.
So on which planet are midwifes going to have enough time to talk to mothers????
thaitanium (21/11/2008 at 23:59)
If you can't feed 'em don't breed 'em.
If you want bread snatchers be prepared to buy food for them as I am sick of buying it for you.
As to the post, the woman didn't know how to wash the baby not much preperation there was there? I will tell her take the baby in one hand and the hosepipe in the other you get the idea.
Deeplish Lass (22/11/2008 at 10:32)
As for your comment about feeding our children I have always worked you ignorant prat so I have paid my way and continue to pay my way so don't make assumptions.
And one thing to remember if you havene't got anything nice so say don't say anything.
MsD, Manchester (22/11/2008 at 12:06)