The scheme, announced by Home Secretary Theresa May in June, was to come into force this month.
A Home Office spokesman confirmed a Sunday Times report that the policy would be scrapped. Hugo Swire, Britain's Minister of state for Foreign and Commonwealth Affairs told PTI recently that "no decision was taken on the visa bond scheme".
The decision is thought to have been taken after Deputy Prime Minister Nick Clegg threatened to block it.
India had also expressed its concern to the UK government both at the ministerial and official levels.
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 visas expired.
Visitors would have paid a 3,000-pound cash bond before arrival in the UK that would have been forfeited if they failed make the return trip.
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