Hungary’s Prime Minister Viktor Orban on Friday said a controversial draft bill to tax Internet traffic will be scrapped following mass protests.

"This tax in its current form cannot be introduced because the government wanted to extend a telecommunications tax, but the people see an Internet tax," Prime Minister Viktor Orban said on Radio Kossuth on Friday.

"If the people not only dislike something but also consider it unreasonable then it should not be done...”.

Tens of thousands of Hungarians rallied in the streets of Budapest this week to protest the plan which they see as an attemptby Orban’s right-wing governmentto curb public debate by limiting access to information it doesn’t control. Protests were also held in six other cities.

The government has denied the tax was devised to inhibit access to information, saying it is an extension of an existing tax on telephones which takes into account the increasing share of communication exchanged online. It also said the tax was needed to cut budget deficit currently equivalent to 80% of GDP and balance Hungary’s 2015 budget.

The European Commission has condemned the plan to tax Internet data traffic, saying it could threaten the freedom of expression.

The government initially set the levy – the world’s first - at HUF 150 (EUR 0,50) per gigabyte but after the protests began it decided to cap the tax at HUF 700 per month for individuals and 5,000 forints for companies. The change, however, failed to appease the protesters.

Orban also said the government would hold a nationwide consultation on Internet regulation, starting in January 2015.