Plans to force visitors from "high risk" countries to pay a £3,000 security bond to enter the UK have been scrapped due to a lack of support from Liberal Democrats and within Government departments, it is understood.
Home Secretary Theresa May's scheme was due to be piloted from this month as a way of deterring temporary visitors from staying on in the UK after their visas expire.
It had been suggested that visitors from India, Pakistan, Sri Lanka, Bangladesh, Ghana and Nigeria would be required to pay the deposit for a six-month visa - but it is believed the scheme had little backing.
The bonds were dropped because they had no support from the Liberal Democrats or within a number of government departments, it was claimed.
Among the departments understood to be opposed to the plans are the Foreign Office, Department for Business, Innovation and Skills, and the Department for Communities and Local Government.
"The Home Office version of the policy was not acceptable to the Liberal Democrats and was not supported by other government departments," Lib Dem sources said.
"They have seen the writing on the wall and binned it off.
"We have been clear from the start that the version was just not acceptable to us."
Earlier this year, the scheme was condemned as ''highly discriminatory'' by Indian business leaders and N ick Clegg indicated he would block the plans if they were applied in an "indiscriminate way".
Mr Clegg told BBC1's Andrew Marr Show: ''Of course in a coalition I can stop things'', and added: ''I am absolutely not interested in a bond which becomes an indiscriminate way of clobbering people who want to come to this country, and in many respects bring great prosperity and benefits to this country, of course not."
A Government spokesman told The Sunday Times: "The Government has been considering whether we pilot a bond scheme that would deter people from overstaying the visa. We have decided not to proceed."
The scheme was part of the Government's drive to cut net migration into the UK to the ''tens of thousands'' by the time of the next general election in 2015.
However, the Confederation of Indian Industry (CII) denounced the plan as ''highly discriminatory and very unfortunate'', warning that it could delay agreement on an EU-India trade deal.
''The suggested changes are not only discriminatory they are also against the 'special relationship' publicised by the UK government. We share the UK's concern on illegal immigration but surely there are other more effective and non-discriminatory ways to put a check on it,'' it said in a statement.
Their complaints were echoed by the chairman of the Commons home affairs select c ommittee, Labour MP Keith Vaz, who described the scheme as ''unfair and discriminatory''.
''This flies in the face of the Prime Minister's intention to attract the brightest and best to Britain and sends out the wrong message to the countries concerned," he said.
Shadow Immigration Minister David Hanson said: "After ad vans and texts to the wrong people, it seems David Cameron's Government can't get anything right when it comes to dealing with illegal immigration."
Immigration Minister Mark Harper said: "It is clear our reforms are working because net migration is down by a third since its peak in 2010. We are building an immigration system in the national interest by tightening areas where it was abused.
"The Immigration Bill will reduce the pull factors and ensure those people who do come to the UK are here to contribute, and not access public services they are not entitled to.
"Hard-working people expect and deserve an immigration system in the national interest that is fair to British citizens and legitimate migrants and tough on those who abuse the system and flout the law."