Ethiopia's government is set to abandon plans to expand the boundaries of the capital, Addis Ababa, which have caused months of deadly protests.
Demonstrations by people from the Oromo ethnic group have been sparked by fears that Oromo farmers could be displaced.
Human rights groups have estimated that at least 140 people were killed by security forces during the protests.
The ruling party in the Oromia region said it was dropping the plan following discussions with local people.
The Oromo People's Democratic Organisation (OPDO) made the decision after three days of talks, the state broadcaster EBC reports.
The OPDO, along with the Addis Ababa city authority, would have been responsible for implementing the "master plan".
Oromia is Ethiopia's largest region, and completely surrounds the capital.
The government has disputed the death toll quoted by the New York-based Human Rights Watch, saying the figure was an overestimation.
Abiy Berhane from Ethiopia's London embassy told the BBC's Focus on Africa radio programme that the government "has been trying to avoid confrontation", but the protests were hijacked "by people whose intention it was to induce violent confrontation".
The government has also said that plan was going to be implemented only once "a consensus had been reached after in-depth and full discussions".
But a message on the Facebook page of a leading online campaigner says Oromo activists have "dismissed" the government's change of heart as "as too little too late".
The master plan was proposed as a way to incorporate the areas close to Addis Ababa into the capital's rapidly developing economy.
The recent wave of protests began in November last year, but anger over the proposed expansion of Addis Ababa goes back to 2014.
Observers say that the Oromo protests build on long-standing complaints that the community has been excluded from political and economic power.
At the last census in 2007, the Oromo made up Ethiopia's biggest ethnic group, at about 25 million people out of a population at the time of nearly 74 million.