Carlos Moedas, secretary of state to the prime minister and in charge of overseeing Portugal’s bailout program, said the reversal was “part of the journey” for any government forced to make significant adjustments in return for a bailout.

“The fact that we came back on our decision,” Mr. Moedas said, “had absolutely nothing to do with people coming out on the streets and everything to do with the fact that we got to understand that the ones who were supposed to be the beneficiaries actually did not want the measure.”

Still, the prime minister has struggled to regain the public’s confidence. The effort has been clumsy at best, his critics say. Many felt insult was added to injury when the government subsequently suggested that employers should lower not only their labor costs but their prices as well.

“We are at a low point in our relationship because a government seriously damages its credibility when it doesn’t take the pulse of the real economy before coming up with new measures,” said João Vieira Lopes, the president of the Portuguese Commerce and Services Confederation, which represents about 200,000 companies. Indeed, after watching helplessly while their economy shrank, many Portuguese are now openly challenging the austerity prescription as the wrong medicine for the malaise.

Mr. Vieira Lopes suggested that the fundamental problem was that the bailout assistance program from Portugal’s international lenders did not take sufficiently into account the specifics of the nation.

“The austerity model has been applied rather mechanically,” he said. “This is not a country full of big companies that can adjust to a decline in their domestic market, but rather small and medium-sized companies whose only option is then to close down.”

Many stores in downtown Lisbon are now either closed or advertising huge discounts, as citizens struggle in a deepening recession that has pushed unemployment to a record 15 percent. A sharp rise in the sales tax has decimated the restaurant sector. One measure of the hardship has been the sudden proliferation of the “marmita,” or lunch box, used by employees to take their home cooking to work. Even the investment banking division of Banco Espirito Santo, one of Portugal’s largest financial institutions, recently refitted a room with tables, refrigerators and microwaves to accommodate the trend.