The increase in national insurance will be reversed from November 6, Chancellor Kwasi Kwarteng has confirmed ahead of Friday's mini budget.
A 1.25 per cent increase in national insurance was announced by former Chancellor Rishi Sunak to help fund health and social care across the country.
Ahead of his mini budget on Friday, Kwarteng said: "Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.
"Cutting tax is crucial to this - and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the levy will help them grow, whilst also allowing the British public to keep more of what they earn."
Kwarteng called the plan to reverse the rise in national insurance contributions a "tax cut for workers".
In a tweet that appears to pre-empt Friday's mini-budget, he said: "I can confirm that this year's 1.25% point rise in National Insurance will be reversed on 6th November.
"Its replacement - the Health and Social Care Levy planned for April 23 - will be cancelled. A tax cut for workers. More cash for businesses to invest, employ and grow," he said.
The Treasury said most employees will receive a cut to their national insurance contribution directly via their employer's payroll in their November pay, although some may be delayed to December or January.
The levy was expected to raise around £13 billion a year to fund social care and deal with the NHS backlog which has built up due to the Covid pandemic.
However Kwarteng said funding for health and social care services will be maintained at the same level as if it was still in place.
The Chancellor and Prime Minister Liz Truss have argued that the lost revenues will be recovered through higher economic growth stimulated by the cuts in taxation.
But with Kwarteng also preparing to scrap a planned rise in corporation tax, some economists have warned about the sharp rise in Government borrowing.
The Institute for Fiscal Studies said the plan to drive growth was "a gamble at best" and that ministers risked putting the public finances on an "unsustainable path".
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