French Prime Minister Edouard Philippe announced a suspension of hikes to fuel taxes in an effort to appease a protest movement that plunged Paris into chaos last weekend.
Philippe said the planned increases, which have provoked violent riots and were set to be introduced in January, will be suspended for six months.
Philippe said "no tax is worth putting the nation's unity in danger."
He added: "This anger, you'd have to be deaf or blind not to see it or hear it."
More than 100 people were injured in the French capital and 412 arrested over the weekend during France's worst urban riot in years, with dozens of cars torched.
The "Yellow Jacket" movement behind the demonstrations started on Nov. 17 as a social-media-organized protest group named for the high-visibility jackets all motorists in France must have in their cars.
It has focused on denouncing a squeeze on household spending brought about by President Emmanuel Macrons taxes on gas and diesel. The president says the increases are needed to combat climate change.
However, over the past three weeks the protests have evolved into a wider anti-Macron uprising, with many criticizing the president for pursuing policies they say favor the rich and do nothing to help the working poor.
Despite mostly peaceful nationwide demonstrations, the protests have turned violent on successive weekends in Paris.
On Saturday, the Arc de Triomphe national monument was defaced and avenues off the Champs Elysees were damaged. Cars, buildings and some cafes were torched.
The unrest is estimated to have cost the economy millions, with large-scale disruption to retailers, wholesalers, the restaurant and hotel industries.