The government has scrapped plans that critics argued would have "criminalised" homelessness following a backlash from Conservative MPs.
The Criminal Justice Bill - which originally contained provisions to target "nuisance begging" - has now been watered down by the government to quell a mounting rebellion of about 40 backbenchers.
Homelessness charity Crisis welcomed the changes but warned the "premise of the proposed laws remains the same".
MPs had raised objections to the bill's stated aim of combatting "nuisance begging", which could have targeted people sleeping in a doorway, those creating "excessive smell" or those who are "looking like they are intending to sleep on the streets".
The original version would also have given police or local authorities the power to issue "nuisance begging directions" to move people on, with a failure to comply potentially resulting in a month in prison.
Instead, following objections from 40 Conservatives from the right and left of the party, the bill will make clear that police and local authorities must prioritise directing people who are sleeping rough to support services before they consider using criminal sanctions.
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The government will also remove references to odours in the bill to "clarify" that previous references to "smells" had been intended to tackle rubbish dumped or human waste and not to wrongly criminalise those who are unable to wash.
Those who continue to cause disruption despite being directed to support services and given a warning will be required to move on with a rough sleeping notice.
Among the MPs who had objected to the plans were Tories: Bob Blackman, Nickie Aiken, Tracey Crouch, Selaine Saxby, Stephen Hammond, Sir Iain Duncan Smith, Jo Gideon, Caroline Nokes, Derek Thomas, John Penrose and Damian Green.
Speaking to The Times last month, Mr Blackman said many of his colleagues believed the bill in its original form to be "completely unacceptable because it would have the effect of criminalising people who have no choice but to sleep on the streets".
Education Secretary Gillian Keegan also told Sky News she did not believe people should be arrested "just if they smell", adding: "It's really about making sure that we support people - but also we make sure that people feel safe on our streets... and it's a pleasant environment."
Following the U-turn, policing minister Chris Philp said: "Nobody should be criminalised for having nowhere to live, but as we have always said, we will not accept behaviour that is anti-social or intimidating to the public, such as rough sleeping in a way that blocks a local business or fire escape."
Mr Philp said he wanted to "thank" Mr Blackman and Ms Aiken for their "dedication and cooperation on this issue".
"We have listened carefully to the proposals and have worked constructively to ensure they are proportionate, properly targeted, and ensure vulnerable people are directed towards support while protecting communities from antisocial behaviour."
James Cleverly, the home secretary, also confirmed the government would scrap the Vagrancy Act from 1824, which makes rough sleeping illegal.
"We are scrapping the outdated Vagrancy Act and replacing it with new measures that focus on supporting people, while ensuring the police and local authorities are able to address behaviour that makes the public feel unsafe," he said.
"This government listens, and we have worked hard to ensure these proposals prioritise helping vulnerable individuals, whilst ensuring communities are safer and better protected."
Crisis said it was "pleased to see that the Westminster government has removed some of the more outrageous measures contained in the bill" following objections from campaigners.
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But the organisation's chief executive, Matt Downie, said that "sadly the premise of the proposed laws remains the same".
"People forced to sleep rough will continue to be viewed as a nuisance and they will remain at risk of fines and prison sentences," he said. "This is unacceptable.
"We have said time and time again that these powers are not needed.
"If the Westminster government really wants to end rough sleeping, then it should focus on the things we know work - such as building thousands more social homes and increasing funding for support services like Housing First.
"Criminalising people who don't have a home will never be the answer."
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