Alan Johnson, home secretary, has ruled out making ID cards compulsory for UK citizens, signalling a significant retreat by the government on its flagship £4.8bn national scheme.

In his first big policy announcement, Mr Johnson said: “Holding an identity card should be a personal choice for British citizens – just as it is now to obtain a passport.”

As a result, pilots and airside workers at Manchester and London City airports will not have to carry the cards in a test scheme, to which unions objected strongly.

The Home Office also confirmed a long-term contract for large-scale production of the cards was being delayed until 2011 or 2012. The Conservative party has pledged to scrap ID cards, meaning that a contract will not be signed if it wins the forthcoming general election.

Mr Johnson’s assertion that no British citizen will be forced to carry a card is a reversal of the position of previous home secretaries, who had said a law for compulsory use would be introduced once 80 per cent of the population owned one.

David Davis, former shadow home secretary, said the reversal showed that “the government has lost its belief in the ID card as a universal check on identity. One of the fundamental design flaws in the system was that it had to be compulsory for it to work as advertised. Otherwise, how could any public servant, be they police, immigration officer or welfare provider, demand to see it?”

While some in the cabinet have raised concerns about the ID card scheme, with Mr Johnson thought to share some of the worries, ministers are keen for it to survive in some form to avoid the embarrassment of abandoning a manifesto pledge. Much of the money spent so far is for technology that can also be used in biometric passports, which have cross-party support.

Mr Johnson said on Tuesday he was an “instinctive” supporter of ID cards and announced plans to extend a voluntary scheme in Manchester to the rest of the north-west. The cards would be useful for young people to provide proof of age and for tackling antisocial behaviour, he said, adding that it had been a mistake ever to allow the perception to grow that they would be a “panacea” to stop terrorism.

Chris Grayling, shadow home secretary, said the decision to beat a “partial retreat” was “symbolic of a government in chaos”.

He added: “They have spent millions on the scheme so far – the home secretary thinks it has been a waste and wants to scrap it, but the prime minister won’t let him. So we end up with an absurd fudge instead.”

The government will offer the cards free to people aged over 75. Nevertheless, the Home Office has so far received only 3,500 expressions of interest from around the country.

Brendan Barber, general secretary of the Trades Union Congress, called the decision on airport workers “a victory for union campaigning. Unions have had reservations about the pilot scheme from the very beginning.” The ID cards will remain compulsory for foreign workers.

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