Council bosses in Stoke-on-Trent say they have withdrawn proposals to fine anyone erecting a tent in the centre of Hanley.
It was put forward as part of a planned Public Space Protection Order for the city centre, which is proposed to reduce anti-social behaviour.
The suggested fine provoked outcry from some residents and charities, who said it unfairly targeted the homeless, who would not be able to afford to pay a £100 fine - which would them escalate to £1,000 for those who fail to stump up the cash and end up in court.
4,500 also signed an online petition against the proposal, which states "We cannot claim to be a City of Culture by fining the most vulnerable in our city."
The authority has now accepted that it should not have been included.
Councillor Randy Conteh, cabinet member for housing, communities and safer city at Stoke-on-Trent City Council, said: “I’d like to stress that we have never fined anyone for being homeless. Our consultation was only ever just that, an opportunity for people to feedback their views on a number of proposals.
"We have listened to the strength of response and will no longer be including the proposal to fine someone for erecting a tent within the Public Space Protection Order area in the city centre. This option should not have been included and we apologise for any distress this has caused.
“We thank those people who have given us their feedback to date. The order is being considered in response to concerns raised by residents, businesses and visitors to the city about aggressive begging and anti-social behaviour – issues which occur in city centres across the country.
“These are complex issues and there is no easy or straightforward answer but we know we got it wrong on this occasion. The consultation without this option will be extended to 20 December 2017. Support for vulnerable individuals is a priority for the city council and its partners. We have a statutory duty to support homeless people and those at risk of becoming homeless, and we are fully committed to providing this support.”