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The Abbott government's GP co-payment has been killed off for good with Heath Minister Sussan Ley telling Coalition MPs "we are not pursuing it at all".
Prime Minister Tony Abbott has made several attempts to wind back the widely loathed $7 fee - first announced in the 2014 May budget - in an attempt to mollify public concern.
But the Coalition has failed to garner enough support in the Senate to introduce the measure which was slated to begin this July.
Under the modified version announced last December, doctors would have faced a $5 cut to their Medicare rebates for some patients which they could choose to pass on in the form of higher fees.
Formally announcing the backdown on Tuesday, Ms Ley said the government had listened to the concerns of health professionals, patients and MPs.
"We recognise that we cannot introduce reforms to build a strong, sustainable Medicare without the support of the public and the Parliament," she told reporters.
"It is clear the proposal for a co-payment and associated $5 cut to the rebate do not have broad support and will not proceed."
During question time Mr Abbott strongly affirmed the decision, saying the co-payment was "dead, buried and cremated", words he has previously used to deny any return to the Howard-era industrial relations policy Work Choices.
"I should have known better. Because Madam Speaker, what I well and truly learnt in my four years as a health minister was if you want to bring about effective health reform in this country it is best done, in fact, often it is only done with the broad support of the medical profession," he said.
Fairfax Media understands Ms Ley told a meeting of Coalition MPs on Tuesday morning "we are not pursuing it at all".
But the government will push ahead with a planned freeze on indexation for all Medicare rebates to 2018, which is expected to save more than $1 billion over four years. It is understood Ms Ley had proposed the indexation freeze be shortened to two years, but cabinet insisted on a four-year freeze.
Treasurer Joe Hockey told reporters dumping the $5 rebate cut would cost the budget "a little less than $1 billion" over four years.
"We've obviously listened to the medical community and we are going to continue to work closely with the medical community," Mr Hockey said.
"But it's vitally important we continue on the path of getting to the point where we as a nation are living within our means."
The government will not immediately propose an alternative saving to make up for the revenue shortfall from the decision to scrap the $5 rebate cut.
Asked whether the GP co-payment was dead on Tuesday, a government MP replied "as a door nail".
The government has been under internal and external pressure to dump the GP co-payment for months.
Seven months ago, former treasurer Peter Costello urged the Liberals to recognise the measure would not pass the Parliament and move on. A trio of government backbenchers also pleaded for changes at the same time.
Before the end of the 2014 parliamentary year Mr Abbott promised to remove so-called "barnacles" plaguing the Coalition. This led to mass confusion stemming from his office about whether the measure was dumped or not.
