"The government has been considering whether we pilot a bond scheme that would deter people from overstaying their visa. We have decided not to proceed," a government spokesman told PTI today.
The move comes ahead of Prime Minister David Cameron's third visit in two years to India on November 14.
Cameron, who will make a day-long visit before heading to Sri Lanka to attend Commonwealth Heads of Government Meeting (CHOGM) on November 15-16, will hold talks with Prime Minister Manmohan Singh on key bilateral and regional issues.
Deputy Prime Minister and Liberal Democrats leader Nick Clegg had also supported India's stand and threatened to block the proposal.
The aim of the scheme was to reduce the number of people from some "high risk" countries - including India, Pakistan, and Nigeria - staying in the UK once their short-term visa had expired.
Visitors would have paid a 3,000-pound cash bond before arrival in the UK - which would be forfeited if they failed to make the return trip.
"During this shambolic process the Home Office has managed to upset a number of foreign governments and confuse millions of potential visitors. This is not the way to fashion a strong and effective immigration policy," he said.
