The people of Norfolk Island rejoiced after the federal government backflipped on a plan to restructure the Pacific island's government.
Territories Minister Jim Lloyd made the announcement, saying the government realised no restructure was needed and any changes would harm the island's fragile economy.
Norfolk Island's secretary to government Peter Maywald described the atmosphere on the island as ecstatic.
Norfolk Island is an Australian territory with a government which raises revenue under its own system of laws, mainly from such sources as customs duty, liquor sales, departure fees and a financial institutions levy.
Opposition territories spokesman Arch Bevis said the government was walking away from a serious problem.
Mr Bevis says a series of parliamentary reports noted a raft of problems associated with the governance, financial sustainability, and the condition of the islands infrastructure.
He says the Howard government is turning its back on the welfare and interests of the people of Norfolk Island.