The decision to abandon changes to class sizes was made in a crisis conference call between senior Cabinet ministers and Prime Minister John Key in the middle of his night in Germany.

Education Minister Hekia Parata announced the major U-turn this afternoon.

Key today insisted the decision to axe the controversial policy came from Parata, and was not a case of him pulling the rug out from under her.



He also stood by the policy as the right one and suggested the government only flip-flopped because of the backlash.



"We were effectively saying to the sector 'here is quite a lot of cash to fund [teacher] development [funded] by making what we think - I still think - is a very modest alteration of class sizes'. But what is clear is that parents don’t see it as modest and in the end perception is reality."



Key signalled he still had confidence in Parata and said she would not be pulled from the education portfolio, despite the heavy damage her class size decision has inflicted on his government.



"Hekia Parata will be the education minister for this term."

Opposition parties are relieved by the back down, but are calling for the Key to apologise for a storm of "angst and concern" placed on parents and teachers.



The planned changes announced in last month's Budget were to have saved the Government around $174 million over four years.



Parata said the Government had decided not to make the changes after it became clear parents did not accept the change.



Both Labour and the Greens called on John Key to take responsibility, saying he should apologise and ask Parata to step aside from her Education portfolio.



"It’s fantastic that the Government recognises its mistake and has made a full back-down over teacher class size increases," Greens Co-leader Metiria Turei said.



"But the Prime Minister needs to take responsibility for the mess he has left the education sector in."



Turei said the debacle had "destabilised the education system", and the Government had now lost the faith of the entire schools sector as well as New Zealand parents.



"It is now impossible for Ms Parata to continue as Education Minister when she has alienated the entire sector," she said.



Labour leader David Shearer said the "humiliating backdown" was a win for New Zealand parents, but the turn-around was only a political one.



"Hekia Parata says she decided to reverse the plan following a 'disproportionate amount of anxiety' from parents.



"This plainly demonstrates that National still did not think that the policy was wrong. The Government still doesn’t get the damage that increased classes sizes will do to children’s learning," he said.



New Zealand First said that the Government pursued the policy in the first showed it was cutting costs with little thought of the consequences.



"The Government hasn’t finished with its slash and burn tactics just because they have backed down on their stupendously stupid idea of bigger class room sizes," said Education spokeswoman Tracy Martin.



"It was a dumb idea when it was announced in the budget and it remains a dumb idea today."

Mana Leader Hone Harawira said the reversal was "not about doing the right thing", rather an admission that National had moved to push a policy without any idea of what the reaction might be.



He called it an "abject failure of government’s decision to use Treasury as its policymaking unit” and an "absolute disaster for the Minister Hekia Parata’s career”.

Key confirmed that the $43 million in savings achieved by cutting teacher numbers would now have to be found elsewhere but would not say how that might be achieved.



"That is for another day."



Mr Key said it had become "blindingly obvious" parents would not wear the policy and that was why the Government had backed down.



"The government has listened to parents. What's been fairly obvious over the last 10 days is that parents are not comfortable in funding any increase in professional training for teachers through any increase in class sizes."



He did not accept, meanwhile, that the government should have foreseen the backlash.



"I think there's always recognition there's an edge toward what we were doing but for the right reasons. And you're always having to test the boundaries; we could have carried on….but from time to time it's clear you're out of step with [voters] thinking whatever the rights and wrongs of the issue."At a press conference today, Parata said "we are reversing the decision."

She said she had discussed it with Prime Minister John Key and other senior ministers this morning.



The change meant $60 million set aside to improve teaching quality and professional leadership would not go ahead.

The change would not affect the track to surplus by 2014/2015.

Savings would come from pre-committed funding in next year's Budget and the Government would find other savings within the education sector.



"The Government will take its time to work through those decisions in a balanced and considered way."



Parata said she would work with the sector to improve teacher quality and lift student achievement.



She would meet with a number of sector organisations over the coming weeks.

"We continue to believe that investing in quality teaching and professional leadership is the best way to do this," Parata said.



The Government had thought modest changes would help fund that investment, she said.



"But over the past week, it has become apparent that these minor adjustments have caused a disproportionate amount of anxiety for parents, and that was never our intention."

Parata said she would stay on as Education Minister.



Labour leader David Shearer this morning said Prime Minister John Key should tell Parata to cancel the plan to increase class sizes.



"He must also front up to New Zealanders with a list of the schools that will supposedly be better off as a result of the policy. Not one school I have spoken to since the policy was announced believes they'll get an increase in teaching staff."



Parents and teachers had made their feelings clear, Shearer said, pointing to polls showing about 80 per cent of voters are opposed to the policy.



There was also no evidence yet of how National would spend its "so-called savings on improving teacher quality".