The British government has made a U-turn on plans to scrap income tax on high earners, following backlash in the governing Conservative Party.

The plan to cut the highest rate of income tax paid by those earning more than 150,000 pounds ($167,790) a year has been criticized as unfair during a cost-of-living crisis.

"We are not proceeding with the abolition of the 45 percent tax rate. We get it, and we have listened," UK Chancellor of the Exchequer Kwasi Kwarteng said in a statement on Twitter.

The decision came just 10 days after a debt-driven mini-budget was announced.

The budget triggered a crisis of investor confidence in the government, hammering the value of the pound and government bond prices and jolting global markets to such an extent that the Bank of England had to intervene with a 65 billion pound ($73 billion) program to settle market jitters.

While the removal of the top rate of tax was only expected to cost around 2 billion out of a 45 billion pound tax-cutting plan, it was the most eye-catching element of a fiscal package that was to be funded by government borrowing, with Kwarteng not explaining how it would be paid for in the long-term.

The pound has clawed back all of its losses against the U.S. dollar since Kwarteng delivered the mini-budget and was at $1.125 at 0617 GMT, up 0.8 percent on the day.

(With input from Reuters, AFP)