The government has dropped debate on a bill about financial services ahead of a likely defeat later.
A group of MPs had hoped to amend the bill to force greater tax transparency in Britain’s Crown dependencies.
Under their plans, Jersey, Guernsey and the Isle of Man would have had to create public registers of beneficial ownership.
The islands said the efforts were “contrary” to established constitutional relationships.
More than 40 MPs had signed the amendment to the Financial Services Bill, requiring the UK to help all overseas territories and Crown dependencies set up a publicly accessible register. It would have obliged them to do so by the end of 2020.
Tory MP Andrew Mitchell and Labour’s Margaret Hodge, who have long campaigned for more transparency over who owns assets in the UK and its dependencies, led the group of MPs.
Mr Mitchell told the BBC: “This amendment is an important continuation of the British G8 agenda on transparency and openness to combat money laundering and tax evasion.
“In the face of certain defeat the government have pulled the business for today but the business will return and so will this important amendment.”
Ms Hodge said public registers “are the next big step for tackling money laundering and tax evasion” but the government had “taken the outrageous step to pull the bill from today’s business”.