IT would have raised about £150,000 a year - but council chiefs insist they will not be pursuing fresh ways of raising the cash after performing a U-turn on night-time parking charges.
The Lib-Dems' decision to backtrack on plans to launch the controversial initiative has been welcomed by protesters.
Leaders had always denied the proposals were simply about making money and maintained it was to manage the number of cars coming into the city at night.
Following yesterday's decision, other campaigners in Southampton are hoping civic leaders will listen to people power once again and reverse other controversial proposals.
As previously reported in the Daily Echo, cost-cutting proposals being considered include scrapping city football pitches and axing St Mary's Leisure Centre.
Liberal Demo-crat deputy leader Councillor Peter Wakeford said: "The primary reason behind the original proposals was to manage the number of night-time cars, but there would also have been a financial implication.
"But the money from increasing charges was not in the budget process anyway and would not have formed any part of the budget we will be proposing."
He added the cash that would have come in had not been set aside for specific areas so they would not be looking at ways of raising it from other sources.
Peter Hannides, who owns George's restaurant in the city centre, presented a petition of more than 1,000 signatures from business leaders and residents to a council meeting earlier this month to protest at the plans.
He said: "This is absolutely brilliant news. Everyone I had spoken to were devastated at the plans.
"It would have had a big effect as it may have put people off coming into town at night."
Peter Wirgman, chairman of Southampton Federation of Residents' Associations, said: "This decision certainly seems to make sense as I don't know what their thoughts were in the first place."
Councillor Jill Baston, Cabinet member for transport and environment, said after her decision: "By giving local people and organisations the opportunity to comment and feedback on the plans, we are demonstrating the effectiveness of the decision-making process where we listen to the views of the city's residents."
Groups in the city have now called on the council to listen to their views on other schemes.
Richard Ember, secretary of the Orchard Homes Sunday Football League, who is battling to stop football pitches being axed in the city, said: "I hope this will be an encouraging precedent, if they have said they have made this decision because they have listened to the views of people.
"We have had overwhelming support for our petition so I hope they will take our views on board, too."
Nick Chaffey, one of the organisers of the campaign to save St Mary's Leisure Centre, said: "The problem with the leisure centre is that there has been no proper consultation about plans to close it.
"However, more than 1,000 people have already signed a petition to keep it open and I hope they will take notice."
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