The highly contentious plans for a £250m sale of England's forests will be abandoned because of the furious backlash that has hit the Government.

David Cameron humiliated his Environment Secretary Caroline Spelman in the House yesterday, and shocked MPs, when he disowned the policy.

The Prime Minister signalled the retreat when he admitted he was unhappy with the proposals under which woodlands owned and run by the Forestry Commission would be sold off over the next decade.

The U-turn came after MPs and hundreds of thousands of members of the public joined the vigorous protests against moves to transfer 637,000 acres of woodlands into private ownership. Details of the abandonment are expected be spelt out tomorrow by Ms Spelman.

Ms Spelman would not have been amused by the Prime Minister's comments. Last night Downing Street said Mr Cameron had full confidence in his Environment Secretary. His spokesman said: "He thinks the entire government is doing a good job."

Mr Cameron, asked by Ed Miliband, the Labour leader, whether he was happy with his "flagship policy" on forests, said: "The short answer to that is no." With his comments, the Prime Minister effectively pre-empted the conclusions of a consultation exercise on the future of the forests which was due to run for another nine weeks.

The ferocity of the public reaction – with a deluge of protests – stunned Downing Street, which decided to draw a line under the policy early.

It is understood that the Government will scrap the consultation and instead appoint a panel of experts to consider the future of publicly owned woodland.

Mr Miliband accused the Government of consulting on "how to flog off the forests, not whether to flog off the forests", and asked: "Are you now saying that you might drop the policy completely?"

Mr Cameron replied: "I would have thought the whole point about a consultation is that you put forward some proposals, you listen to the answer and then you make a decision."

The Prime Minister told the Commons wryly that the Government had received a "range of interesting responses" to the consultation.

There are concerns within the Government that the plans had not been thought through.

One minister said last night: "The whole thing has been a disaster. I can't believe how much flak we're taking on this."

Under the plans, commercially valuable woodlands, such as Kielder Forest in Northumberland, would be leased out under 150-year contracts.

Timber companies, communities and local authorities would be allowed to bid as long as they guaranteed public access and wildlife protection.

Ministers also promised that "heritage forests" – notably the New Forest in Hampshire and the Forest of Dean in Gloucestershire – would be transferred to a conservation charity.

But attempts to placate critics failed to stem the tide of protest over the proposed sale, which was expected to raise between £140m and £250m.

It was condemned by more than 500,000 people in an online petition and a recent survey found that more than 80 per cent of the public wanted the woodlands to stay in public hands.

Further evidence of government disquiet over the reaction came last week when the first tranche of the proposed sale – representing 15 per cent, or almost 100,000 acres of publicly owned woodlands – was put on hold.

Ms Spelman said the delay was to allow protections in the sale conditions – such as guarantees of public access – to be "significantly strengthened".

Mary Creagh, the shadow Environment Secretary, said: "The Tories are on the ropes, and Labour MPs will keep up the pressure until they withdraw England's woodlands from sale."

The Prime Minister's comments were cautiously welcomed by conservation groups yesterday.

Mark Avery, the Royal Society for the Protection of Birds' conservation director, said: "If the Government abandons the policy, that is fine by us. This whole debate has shown the public care about forests and how we are going to have better ones in the future."