The School Transport Bill was one of a number of bills the Tories attempted to block in private negotiations over which legislation should reach the statute book before Parliament broke up.
Opposition MPs and peers had said that the bill might encourage more parents to drive their children to school as charges would deter them from using buses. But the Education Bill, which was debated yesterday, was expected to be passed with few changes. It allows schools to set three-year budgets and creates shorter-notice inspections.
However, the Charities bill, which could have removed charitable status from private schools if they failed to pass a "public benefit test" was dropped.
Dick Davison, joint director of the Independent Schools Council information service, said fee-paying schools would regret that the bill was abandoned.
"We provided evidence for it and, like most of the charitable sector, regarded it as a good bill," he said.