Theresa May is calling off the vote on her Brexit deal in the face of what had been expected to be a significant defeat at the hands of rebel MPs.
A Government source confirmed that the vote was being pulled, with the Prime Minister due to inform the House of Commons in an oral statement at 3.30pm.
News that the crucial "meaningful vote" was being postponed broke just moments after a Downing Street spokeswoman told Westminster reporters at a regular daily briefing that it would go ahead.
The pound fell sharply in response, shedding 0.5% versus the US dollar to stand at 1.26. Against the euro, the pound was 0.8% down at 1.10.
Mrs May was engaged in a conference call by telephone with her Cabinet ministers as the story broke.
There was no official confirmation from 10 Downing Street that the vote was being called off.
But a senior source said: "It's being pulled."
Mrs May's hastily-arranged oral statement is widely expected to confirm that she intends to seek further concessions from Brussels to try to win over rebellious backbenchers.
The statement will be followed by Leader of the Commons Andrea Leadsom announcing changes to parliamentary business for the days ahead, and Brexit Secretary Stephen Barclay will then make a statement to MPs on the Article 50 process.