The European Parliament has bowed down to pressure from retailers and abandoned plans for force retailers to offer free returns from anywhere in Europe and deliver to all EU countries.

The Parliament ended months of fraught discussions and hammered out a deal with the European Council last night which, subject to formal ratification by the European Parliament, will remove the controversial clauses from the Consumer Rights Directive

Online retail trade body IMRG calculated that the changes would have added €10bn (£8.7bn) per year in delivery charges – 4% of the total European online consumer spend.

The European Parliament has also amended the clause which obliged retailers to sell to all the member states of the EU. It now requires retailers to make it clear, early in the transaction process, if and why it does not deliver to specific countries.

Retail Week’s Ditch the Directive campaign has highlighted the disastrous consequences the proposals would have, backed by UK etail heavyweights including Shop Direct and N Brown, launched last month, petitioning for the European Parliament to Ditch the Directive.

European Parliament rapporteur Andreas Schwab said: “Consumers and businesses will equally win. We are a big step closer to a truly common internal market in Europe.”

However, clauses which make retailers process refunds within 14 days and double the time that customers have to inform the retailer they are returning goods to 14 days remain within the directive.

The European Council still needs to give the regulation the green light but Parliament negotiators hope to receive final confirmation by Thursday. The directive will then need to be formally approved by Parliament which it said could happen either next week or in its July session.

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Ditch the Directive: Breakthrough as EU ditches controversial plans