Environment Secretary Caroline Spelman has confirmed that consultation on the plans was being halted.Private companies and charities such as the National trust had been poised to run woodland.
A public outcry over the plans led to half a million people signing a petition against the sell-off.
Spelman announced the policy was being removed from the Public Bodies Bill currently going through Parliament.
She told MPs: "I would like to take full responsibility for the situation which brings me here. I'm sorry. We got this one wrong, but we have listened to people's concerns. One of the things we teach our children to do is say sorry. It is not a humiliation; it is my choice."