Pensioners and seniors in Queensland will retain their concessions, the State Government says, reversing a decision to reduce funding outlined in the 2014 state budget.

The LNP Government had been facing a backlash from older voters over the cuts, which it blamed on Federal Government reductions of $50 million to its scheme, which provides discounts on household bills.

The State Government repeatedly said it could not afford to make up the shortfall.

Handing down the budget on Tuesday, Treasurer Tim Nicholls confirmed that state-funded concessions would be cut.

However, today Premier Campbell Newman told Parliament the money had been found to maintain the full range of pensioner and senior concessions.

"Pensioners and older Queenslanders have told us that they simply can't wear the cost," he said.

"We're not only listening to Queenslanders, but we're acting within the space of two days to reinstate the full level of the pensioner and senior concessions because of the Commonwealth cuts."

But the dispute with the Federal Government over the funding cuts isn't over.

Mr Newman says Queensland will withhold payments to the Commonwealth or recoup the money in other ways.

"We'll be looking for opportunities - all opportunities - to withhold and recoup funding from Commonwealth programs and initiatives that they ask States to contribute to from time to time, to make up for the shortfall that they've created," he said.

"We will continue to send a clear message to Canberra, that Queenslanders won't stand for these kind of cuts."

Opposition Leader Annastacia Palaszczuk says Mr Newman and Queensland Treasurer Tim Nicholls should have realised that earlier, and that seniors felt betrayed.

"Yesterday, the cuts to concessions were an essential part of this Treasurer's financial strategy - today they are gone," she said.

"Pensioners will never forget how this Government treated them."

National Seniors chief executive officer Michael O'Neill says the backflip is welcome.

"It's unfortunate that it was introduced in the first place and has clearly caused a lot of anxiety," he said.

"At the end of the day if [Mr Newman's] come to his senses that's certainly a good result."

Queensland Council of Social Service spokesman Mark Henley says he is pleased vulnerable Queenslanders have been heard.

"They have limited access to income and they don't and can't control the cost of living, so I think these concessions are going to be very well received," he said.

"This is going to provide some relief and hopefully avert some people where they may have otherwise fallen into crisis."

The cuts were a political risk for the Government ahead of the Stafford by-election, which will be held on July 19.