Popular garden centre Dobbies has been planning to charge charities up to ?400 a week to collect donations in its stores.
The garden centre business, which has outlets in Midlothian and West Lothian, was attacked by charity bosses over the money-making scheme.
Fundraisers who collect at its centres feared small charities would be driven out by the charge.
But after being contacted by the Evening News yesterday, Dobbies immediately reversed the policy and said it will now ?not be charging charities for renting promotional space?.
The U-turn has been hailed by opponents outraged at the levy.
One charity, which asked not to be named, claimed Dobbies wanted ?400 a week ? or ?200 for weekends ? to allow charities to collect from shoppers on their premises.
Dobbies has declined to disclose the exact charges it was touting, but did not deny these figures when asked about them by the News.
Last night, a charity whistle-blower said he did not think it was right charities faced handing over such huge sums ? simply for using Dobbies? shopfloor.
He said: ?I don?t suppose customers making donations would be happy to know half their money was going to the store. We?d never heard of such charges before and were quite shocked. On a good weekend you might collect ?400 so they were effectively asking for half.?
Tin-rattling former serviceman Tom Gilzean, who has collected ?100,000 for the Sick Kids hospital, branded charging for charity collecting ??disgraceful?.
The 93-year-old said: ?I?d give up collecting before paying charges. Charity is charity and no-one else should be taking it away. I think it?s sheer greed. It?s wrong and they must be out of their box.?
Colin Flinn, head of fundraising at Poppyscotland, was equally aghast at the hidden charge. He questioned the need for it and said: ?The support we have received from shopping and garden centres over the years is vitally important to the overall funds raised.
?We would question any suggestion of introducing charges for collections as it would have serious implications for our fundraising and, ultimately, the support we are able to provide for veterans and their families.?
Gordon Henderson, senior development manager with the Federation of Small Businesses, said: ?I find charging charities for collecting very surprising. I would very much hope no small business would do so.?
Asda, Morrisons and Tesco were among the firms which told the Evening News they levied no charges on charity collectors. Dobbies insisted it had ?reviewed? its community guidelines and will ?not be charging charities for renting promotional space in our garden centres?.
A spokesman added: ?The Dobbies Community Plan is at the heart of everything we do and a large part of this involves fundraising work with our local and national charity partners. Dobbies is proud to have raised over ?300,000 for our nominated charities this financial year and we will continue to focus our fundraising efforts on this.?
Dobbies was selling access to its centres through a Glasgow-based body called Space and People, which markets promotional space in shopping venues. A spokeswoman for the organisation said it has become ?common practice? in the retail industry to charge charities who want to use ?high footfall venues? for fundraising.