Civil liberty campaigners claimed a victory today after the government announced it is dropping current proposals to retain the DNA profiles of innocent people on the national database.

The Home Office has announced that its plan to keep the DNA profiles of those arrested – but never convicted of a crime – for between six and 12 years depending on the seriousness of the offence has been dropped from the policing and crime bill that is going through parliament.

A European court ruling in December found it was unlawful to keep the DNA details of 850,000 innocent people indefinitely on the national database.

The authors of the research on which Home Office ministers based their plan had disowned the proposals. The Jill Dando Institute for Crime Science said its work should not have been used to decide the six- to 12-year time limits because the work was unfinished.

A Home Office spokesman said they hoped to bring forward "further provisions" on DNA retention in the next policing and crime bill earmarked for the next session of parliament, which opens on 18 November. "We have now completed a public consultation on proposals to ensure the right people are on the database as well as considering when people should come off. Those proposals were grounded in the research and allowed us to respond to the judgment of the European court of human rights both swiftly and effectively.

"The government will take the most expedient route to address the issue as soon as possible in order to comply with the European court's judgment."

It is thought that the government would have faced defeat in the House of Lords this week over its DNA retention package if it had pressed on regardless. Ministers need to get the current policing and crime bill on the statute book before next month's Queen's speech and have started making concessions on the most contentious areas of the legislation in order to do so. Last week proposals to introduce "gasbos" – special injunctions to tackle inner city gang membership – were watered down to get them through the Lords.

Chief constables have already been warned by the Home Office to ignore the European court ruling and carry on adding the DNA profiles of the tens of thousands of people they arrest to the national database. But the further delay in clarifying the legal situation is likely to increase the possibility of a high court legal challenge from individuals who feel their DNA has been unlawfully kept.

Isabella Sankey, Liberty's policy director, said: "Better late than never, the government wakes up to concerns about personal privacy. Its current discredited proposals of stockpiling innocents' intimate details for years on end would have breached article 8 of the human rights convention all over again. Whoever thought that this kind of policy could be dealt with via backdoor regulations needs their head rather than their DNA tested."

Commenting on the government dropping its current plan, the Liberal Democrat home affairs spokesman, Chris Huhne said: "It is not surprising that the government has ditched its ill thought out DNA proposals after their savaging by statistical experts.

"It was scandalous to attempt to respond to the European court ruling by circumventing parliament. The government must take this opportunity to end their fudge on DNA. The innocent should be removed from the database immediately – no ifs, no buts."

The announcement comes as the police have won an appeal against an information tribunal ruling that data on old, minor convictions must be deleted from police computers.

The ruling by the court of appeal came in a test case relating to the convictions of five people. Had it gone against the police about 1m convictions probably would have been deleted.

Three judges ruled that retaining information for police operational needs in the fight against crime was far easier to justify than actually disclosing the information to others.