Downing Street has confirmed the government will delay implementing a planned reduction in the maximum stake on fixed-odds betting terminals, despite an outcry from MPs and gambling charities.

Ministers announced in May that the maximum stake on FOBTs would be cut from £100 to £2, following pressure from campaigners. It had been expected this would be implemented in April next year.

However, in documents released with Philip Hammond’s budget, the Treasury announced this date would now be October 2019, a delay local councils warned about last week.

When asked about the move, Theresa May’s spokeswoman dismissed the idea the date could be altered. “That decision has been made,” she said.

The wait is to allow bookmakers and the gambling industry to adjust to the change, as well as helping Treasury coffers, with the lower stake expected to cost £1.15bn in reduced gaming duty over five years. The shortfall will be made up by an increase in the tax on online casino games from 15% to 21%, also announced in the budget on Monday.

The former Conservative party leader Iain Duncan Smith is one of a series of Tory MPs pushing against the timetable change, saying he wants the deadline moved back to April or May.

The delay to introducing the reduction in the maximum stake was condemned by MPs including Tom Watson, the deputy Labour leader. “By rolling back on their promises, the government are allowing greed to triumph over good as the bookies trouser an additional £900m in revenue,” he said.

Campaigners say FOBTs are hugely addictive and cause enormous social damage. Carolyn Harris, the Labour MP who chairs an all-party parliamentary group on the machines, said the delay was “immoral and exploitative”.

Sarah Wollaston, the Conservative MP for Totnes, tweeted her dismay at the decision, saying: “The power of the industry lobbying at Westminster is sickening.”

May’s spokeswoman said the October deadline was “a balance between making sure we protect those who work in the industry and making sure that we bring in this really important change”.

The Campaign for Fairer Gambling described the move as unacceptable.