Ministers are to announce that they have decided to shelve plans to introduce legislation forcing cigarettes to be sold in plain packaging in the UK.

In a written statement to MPs, the Department of Health will say that it wants more time to study the impact of a similar law in Australia before deciding to press ahead with standardised cigarette packaging in England.

But the decision has been described as "bitterly disappointing" by Cancer Research UK, which said that allowing cigarettes to carry on being sold in branded packets would cost lives.

Dr Harpal Kumar, the charity's chief executive, told BBC Radio 4's Today programme on Friday that the decision showed the government was putting "profits of the tobacco industry" ahead of the public's health.

He said the tobacco industry was entirely dependent on recruiting children because smoking was an addiction that killed half of all users. He also said there was very strong evidence from Australia "that demonstrates that packaging does make a difference to children taking up this product".

"The government should show leadership to protect the health of future generations," he said. "They claim to be interested in public health. It's time to show that interest."

But Mark Field, a Conservative MP, told the programme that he welcomed the government's "sensible and pragmatic" decision to postpone pressing ahead with a plain packaging law.

With the economy still recovering, a move of this kind "runs counter to our message that we are open for business", he said.

He said that imposing plain packaging would cost the Treasury "significant sums of money" because it would have to pay compensation to cigarette manufacturers for the loss of intellectual property rights. And he also said that the evidence that plain packaging would lead to fewer young people taking up smoking was not yet "rock solid".

The decision to postpone the introduction of plain packaging meant it was unlikely that any law would be introduced before the 2015 election, Field added.

The Department of Health held a consultation on the issue last year and Anna Soubry, the public health minister, was at that point understood to be in favour of legislation.

But Downing Street was worried about the impact on jobs, and the first sign that the plan was being shelved came when legislation for plain cigarette packaging was excluded from the Queen's speech earlier this year.

Some campaigners have attributed this to the influence of Lynton Crosby, the Australian political strategist who is co-ordinating the Conservative party's general election campaign and who has told David Cameron to focus his efforts on core issues, such as immigration and welfare, and to avoid being sidetracked by more marginal issues.

In the Commons, Labour MPs have asked the prime minister about the role that Crosby, whose lobbying company has worked for the tobacco industry, played in the decision not to include a cigarette packaging bill in the Queen's speech. Cameron rejected claims that Crosby had "lobbied" him on this issue, but refused to say whether he had discussed the move with his general election co-ordinator.

The Department of Health said it was right not to rush a decision on plain packaging. A spokesman said: "This is an important decision and we make no apology for taking time to get it right."

Forest, the pro-smoking pressure group, welcomed the decision. "Ministers have listened to ordinary people. This is good news for those who believe in consumer freedom and are opposed to excessive regulation," said Angela Harbutt, a Forest spokeswoman.

But Diane Abbott, the shadow public health minister, said the government was putting "their friends in big business" ahead of the interests of British families.