The Danish government is to scrap a controversial tax on fatty foods, the first of its kind in the world, which was introduced last year to tackle obesity.
The surcharge affected foods with more than 2.3% saturated fat such as dairy products, meat and processed foods.
But the tax ministry said the levy had been criticised for inflating food prices and putting Danish jobs at risk and contributing to Danes crossing the border into Germany to buy food there.
Denmark is also dropping plans to bring in a tax on sugar, AFP reports.
The government and the Red Greens reached the agreement as part of their negotiations on the 2013 budget bill.
The previous right-wing government introduced the fat tax in October 2011 to limit the population's intake of fatty foods.
According to the Danish National Health and Medicines Authority, 47% of Danes are overweight and 13% are obese.
The measure added 16 kroner ($NZ3.35) per kilo of saturated fats in a product.