Campaigners fighting the proposals for land at Leven Carrs, between Beverley and Brandesburton, are celebrating the news the Environment Agency won't consider deliberately flooding the land in the middle of the River Hull catchment area.
The scheme would have created a new water storage area in the event of heavy rainfall.
Brandesburton farmer Martin Voase, of the River Hull Flood Action Group, said campaigners were delighted by the agency's U-turn.
He said: "We are really pleased they have actually listened to our concerns and acted on them. It's a victory for commonsense.
"We have still got to see what alternative options will be put forward but this is fantastic news."