South Korean President Yoon Suk Yeol has said that he would lift a surprise martial law declaration he had imposed just hours before, honouring a parliamentary vote against the measure.
In South Korea's biggest political crisis in decades, Mr Yoon declared martial law during a televised address to thwart "anti-state forces" among his domestic political opponents.
However outraged lawmakers unanimously rejected the decree. Yonhap news agency said the cabinet had agreed to scrap the martial law.
Protesters outside the National Assembly parliament shouted and clapped when it was announced that the martial law would be lifted. "We won!" they chanted and one demonstrator banged on a drum.
Cho Kuk, head of a minor opposition party, met protesters outside parliament and said: "This isn't over. He put all the people in shock." He vowed to impeach Mr Yoon by putting together votes from other parties.
The South Korean won currency came off a more than two-year low against the dollar after Mr Yoon's reversal, while exchange traded funds linked to South Korean stocks similarly cut losses.
Mr Yoon's surprise declaration of martial law, which he cast as aimed at his political foes, was voted down by 190 lawmakers in parliament. His own party urged him to lift the decree.
Under South Korean law, the president must immediately lift martial law if parliament demands it by a majority vote.
The crisis in a country that has been a democracy since the 1980s, and is a US ally and major Asian economy, caused international alarm.
Watch: Protesters gathered outside National Parliament in Seoul
US had 'grave concern'
Earlier, US Deputy Secretary of State Kurt Campbell said the United States was watching events in South Korea with "grave concern" and hoped that any political disputes would be resolved peacefully and in accordance with the rule of law.
Some 28,500 US troops are stationed in South Korea to guard against the nuclear-armed North.
After Mr Yoon's announcement of martial law, South Korea's military said activities by parliament and political parties would be banned, and that media and publishers would be under the control of the martial law command.
Helmeted troops briefly tried to enter the parliament building. Parliamentary aides were seen trying to push the soldiers back by spraying fire extinguishers.
Mr Yoon did not cite any specific threat from North Korea, instead focusing on his domestic political opponents. It was the first time since 1980 that martial law has been declared in South Korea.
Mr Yoon, a career prosecutor, squeezed out a victory in the tightest presidential election in South Korean history in 2022. He rode a wave of discontent over economic policy, scandals and gender wars, aiming to reshape the political future of Asia's fourth-largest economy.
But he has been unpopular, with his support ratings hovering at around 20% for months.
His People Power Party suffered a landslide defeat at a parliamentary election last April, ceding control of the unicameral assembly to opposition parties that captured nearly two-thirds of the seats.
There have been more than a dozen instances of martial law declaration since South Korea was established as a republic in 1948.
The last time, in 1980, a group of military officers led by Chun Doo-hwan forced then-president Choi Kyu-hah to proclaim martial law to crush calls by the opposition, labour and students for the restoration of democratic government.
