But the opposition countered that the announcement won't change anything and talks will continue on toppling Prime Minister Stephen Harper's government.
Opposition Liberals, New Democrats and Bloc Quebecois have been discussing forming a coalition government, arguing Harper has no solid plan to deal with the global economic crisis.
The parties have also criticized a government proposal to scrap public subsidies for political parties. The opposition relies on the subsidies far more than the Conservative party.
Government Transport Minister John Baird said Saturday they won't go ahead with the subsidy proposal.
"When it comes to the funding and subsidies that political parties get, we just don't think it's worth getting into an election on that issue," Baird said.
The Liberals said they are considering introducing a motion declaring no confidence in the minority Conservative government. A Harper defeat on such a vote could set the stage for another election or give the opposition a chance to form a government.
Harper's Conservatives won enough votes in the Oct. 14 election to stay in power, but it must rely on opposition support to pass budgets and legislation.
Liberal leader spokesman Mark Dunn said coalition talks continue despite the government's subsidy reversal.
"The issue has always been the economy and Harper's failure to offer Canadians a plan to protect jobs, savings and mortgages," Dunn wrote in an e-mail. "While the world reacts to the global economic crisis, Harper fiddles."
Harper has criticized the opposition moves as an effort to take power without facing the voters. He's also defended his response to the economic crisis, saying he had acted to keep taxes low and that in the next couple of months his party will introduce a budget that will includes a stimulus package.