The decision to reverse the abolition of cheques by 2018 has been hailed as a victory for 'common sense' and 'consumer choice'.
The Payments Council announced yesterday afternoon that it had taken the decision to not phase out the payment method over the next seven years.
It said that cheques will be kept for as long as people need them.
The original decision proved controversial as business organisations and campaigners for the elderly said that cheques are still widely relied upon.
A group of MPs had ordered that new evidence be taken following the backlash.
Dr Ros Altmann, director general of Saga, said that the decision was the right one, pointing out that almost seven in ten older people disagreed with the Payments Council's decision t abolish them.
"Money in the modern era is easy-come-easy-go; the ceremony of writing a cheque gives importance to a transaction, and reminds people of an era when money was a great deal more scarce, and a great deal more valued," she added.
"This is a fantastic victory for common sense - Saga has daily contact with millions of older people, and we have led or backed every effort to ensure the powers that be know that the cheque is well short of being past it."
Consumer group Which? criticised the original decision to get rid of cheques.
"This is great news for the millions of people who regularly use cheques," said Which? chief executive, Peter Vicary-Smith.
"Whilst it may be more convenient for the banks to process other forms of payment, it's not so easy for their customers".
"To announce a timetable for the abolition of cheques before any suitable alternatives had been put in place was never a good idea. This is a victory for common sense."
While cheque usage has fallen in recent years, more than one billion payments are made using the old paper method every year, and are still the preferred and most trusted way of payment for many.
Kay Blair, vice chair of the Consumer Panel, said that people should be allowed to choose the payment method they prefer when spending their own money.
"Three years down the line from the original inquiry there is still a lack of effective alternatives to cheques."
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