Plans for a £6m waste transfer station at Trehir have hit the buffers over cost concerns.
The scheme included technology to generate electricity from gas coming from the former landfill site. A recent report to Caerphilly County Borough Council expressed concern that not enough gas was being produced to make the project economical.
Labour opposition councillors and politicians have reacted to the news with delight.
Jeff Cuthbert AM said “I fully support the Labour Group on Caerphilly Council. If this change is supported in council it will ensure that millions will not now be wasted and can be put toward employing front line staff.”
Labour Group leader Harry Andrews added:“We have been campaigning against this wasteful proposal for some time and we are delighted that we will have an opportunity to make Plaid rethink this.”
The U-turn will need to be agreed at a meeting of full council in February.