Campaigners and charities have claimed a major victory after the government announced a U-turn on its controversial Lobbying Bill.

The TUC welcomed the climbdown but warned that the Bill was still bad news for trade unions.

“It still limits campaigns against extremist parties, breaches the privacy of trade union members and fails to open up lobbying,” said general secretary Frances O’Grady.

“If ministers think that opposition will now melt away, they have another think coming.”

The Transparency of Lobbying, non-Party Campaigning and Trade Union Administration Bill was met with public outcry over clauses that charities would silence legitimate campaigns.

Now ministers have tabled a series of amendments and have dropped proposals to change the way campaign spending by organisations other than political parties was defined.

Originally the government had sought to restrict campaign spending for “election purposes” — but charities and campaign groups warned the law could be interpreted too widely and affect their work.

The Bill would set a £390,000 cap on the amount any organisation — excluding political parties — could spend on election campaigning.