The Government is to announce U-turns on its controversial pasty tax and caravan tax revealed in the Budget.
Critics slammed plans to levy VAT at 20% on all hot food, saying the move hit lunchtime snacks like pasties.
But under the new proposals, it is thought that VAT will only be charged on food intended to be served hot - not food that is cooked and then left to cool.
Proposals to charge full VAT on static caravans are also expected to be watered down - being levied at just 5%.
The rethink follows a consultation period which ended on May 18.
A Treasury source said: "We rightly consulted, listened and are glad we have a solution that is fair."
While a Treasury spokesman said: "The Budget announced a consultation on a change to VAT on hot takeaway food, designed to remove inconsistency and ambiguity in the system and level the playing field across the takeaway food market.
"After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply.
"We have addressed these in a way that allows us to remove the inconsistent VAT treatment, while not imposing any additional requirement on businesses to test the temperature of their products."
Under the new plans, VAT will be charged on food that is provided hot or cooked to order.
It will also apply to items that are kept warm in hot cabinets or served in heat-retaining packaging - for example, a takeaway in foil-lined packaging.
Snacks which are advertised as hot will also be subject to the tax.