The government has abandoned plans to make digital ID cards mandatory for workers.
Sky News understands digital IDs will no longer be required for the right to work by the end of this parliament, set for 2029.
Last year, the government had said it would be compulsory as a way of reducing illegal working.
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A government spokesperson said on Tuesday: "We are committed to mandatory digital right to work checks.
"Currently right to work checks include a hodge podge of paper-based systems with no record of checks ever taking place. This is open to fraud and abuse.
"We have always been clear that details on the digital ID scheme will be set out following a full public consultation which will launch shortly.
"Digital ID will make everyday life easier for people, ensuring public services are more personal, joined-up, and effective, while also remaining inclusive."
According to The Times, while right to work checks will still be mandatory, other forms of documentation, such as an electronic visa or a passport, will be valid - not just digital ID.
The Conservatives accused Sir Keir Starmer of "spinelessness", while the Lib Dems said the plan was "doomed to failure".
It is the 13th U-turn by this government.
Just four months ago, Sir Keir said: "You will not be able to work in the UK if you don't have a digital ID, it's as simple as that."
He said the scheme would "make it tougher to work illegally in this country, making our borders more secure".
The government had previously said anyone starting a job or renting a home would need to show the digital ID on their phone, and it would then be checked against a database of those entitled to work and live here.
Tory shadow Cabinet Office minister Mike Wood said: "While we welcome the scrapping of any mandatory identification, this is yet another humiliating U-turn from the Government.
"Keir Starmer's spinelessness is becoming a pattern, not an exception.
"What was sold as a tough measure to tackle illegal working is now set to become yet another costly, ill-thought-out experiment abandoned at the first sign of pressure from Labour's backbenches."
Lib Dem Cabinet Office spokesperson Lisa Smart MP said: "Number 10 must be bulk ordering motion sickness tablets at this rate to cope with all their U-turns.
"It was clear right from the start this was a proposal doomed to failure, that would have cost obscene amounts of taxpayers money to deliver absolutely nothing.
"The government now needs to confirm that the billions of pounds earmarked for their mandatory digital ID scheme will be spent on the NHS and frontline policing instead."
(c) Sky News 2026: Government U-turns on mandatory digital ID cards for workers
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