Nicolas Sarkozy has decided to drop controversial plans that would have led to more than 180,000 Britons with second homes in France, having to pay a new tax on their properties.

There are an estimated 360,000 non-resident second home owners in France, of which around 200,000 are British. The French parliament approved the new tax just a week ago, but faced with a two-pronged revolt from irate Britons and French people living abroad, the president chose to remove it via an amendment.

French expatriates will be represented by an MP for the first time after next year’s election, giving them far more political clout, and the scheme had been described as ‘electoral suicide’ for Sarkozy.

Non-resident French home owners already pay two taxes – one by the person who owns the house and the other paid by those who live in the property.

Under the new law, homes only used for a few weeks a year, would be liable for a third tax, calculated at 20% of the theoretical annual rent that could be gained from the property if it were rented full-time.

Karen Tait, editor of French Property News, said: "French Property News is delighted to hear of the u-turn on the proposed holiday homes tax – common sense has prevailed.

"We have heard from many readers over the past weeks – both those who already own a holiday home and those planning on buying one – who were extremely worried. In the current economic conditions, this tax was the last thing the French property market needed. Even if it hadn’t amounted to as much as was at first feared, it still represented an extra cost many people would have struggled to afford - few owners belong to the super-rich category with holiday homes all over the world!

"There was a real fear that this tax, even if it was relatively minimal, would have sent out the wrong message to potential buyers, and discouraged them from buying in France. This would have been bad news for France, as British owners put a good deal of euros into the coffers of their local French communities – not to mention often renovating houses that were falling into disrepair.

"While the proposed tax wasn’t actually tested under EU law, in terms of whether it was discriminatory or not, undoubtedly the French government wouldn’t have wanted the bad publicity that would have accompanied such a challenge."