The Government has tonight cancelled the tender process for awarding a contract for State subsidised flights to the Aran Islands.
The decision follows a month of confusion about the Public Service Obligation (PSO) flights to the three islands.
In a statement, Minister of State for Gaeltacht Affairs, Joe McHugh, said he would notify the European Commission as soon as possible and then begin a new tender process for the air service.
The Department says it will enter into talks with the existing provider - Aer Arann - so that there will be no disruption to flights when the current contract ends next week.
The decision to abandon the tender process is a major climb down from the Government.
After announcing that a helicopter company had been selected as the "preferred tenderer" at the end of August, residents of the Aran Islands expressed anger at the loss of fixed wing services and the proposed move of flights from Connemara to Galway.
It subsequently emerged that the Department had no clarity as to the availability of Galway Airport as an aviation hub for the duration of the four year contract.
Earlier this month, Minister McHugh said he was delaying a final decision until he got certainty in this regard.
The airport is owned by the two local authorities in Galway and an aviation lease for the facility ends on 15 December.
Residents of the islands were opposed to the helicopter service because they said it did not suit their requirements.
They also felt that switching the mainland base from Na Mine in Connemara to the eastern side of Galway city would cause unnecessary difficulties on a regular basis.
Tonight a spokesperson for the residents said they welcomed the latest developments. Campaigners on the islands say they want to be consulted about the next tender process, before it gets underway.
A spokesperson for Executive Helicopters, which was named as the preferred tenderer said the company was very disappointed at the Department's decision and would now be reviewing all its options in light of the announcement.