Plans for up to 40 Las Vegas-style
"super casinos" across the UK have been scaled down by the government.
Critics fear a rise in the number of problem gamblers
Its Gambling Bill has faced opposition from MPs, including Labour members, who fear an increase in gambling addicts.
Culture Secretary Tessa Jowell told Labour MPs that only eight such casinos will now be allowed to open initially.
Whether they lead to an increase in problem gambling and help regenerate their local area will be assessed before any more can be approved.
BBC correspondent Jonathan Beale said the limit on the casinos, confirmed by Department for Culture, Media and Sport (DCMS) sources, represented a "climbdown" for the government.
The plans ran into opposition from anti-gambling and church groups almost as soon as they were announced.
There was also opposition from Labour MPs - 29 of them voted against the bill earlier this month.
On Monday, Ms Jowell told a meeting of Labour MPs she had listened to their concerns over levels of gambling addiction and crime.
Culture minister Richard Caborn said: "This is good government, listening to people and responding to them in legislation."
Shadow culture secretary John Whittingdale said the move went "a long way towards meeting our concerns and those of a great many people who fear the consequences of the proliferation of super casinos".
But he added: "There will need to be a full assessment of the impact of the pilot schemes over a sufficient period before any further casinos are allowed.
"We shall be pressing for further safeguards, in particular an identification requirement for those entering the gaming areas in order to provide additional protection for problem gamblers and against the dangers of money laundering."
Bob Wiper, chief executive of UK casino operator Stanley Leisure, said the scaling back of plans was a "fairly balanced decision".
"What the government is saying is that they are listening to people's worries about the proliferation of 'super casinos'," he said.
Mr Wiper said he was confident that the first eight casinos would be "deemed a good value for money experience" and lead to approval being granted for more.
He added that the threat of increased gambling addiction could be countered with loyalty card schemes.
"You would be able to track people's play, identify people that are potentially becoming addicted players and then deal with that.
"As a responsible industry, we would be happy to put those tracking devices in place."
The Salvation Army welcomed the scaled-back plans but still thinks the bill will lead to an increase in problem gambling.
"The Salvation Army calls on the government to take at least five years to assess the social and economic impact [of casinos] before allowing any more," a spokesman said.
The Gambling Bill is being scrutinised by a committee of MPs on Tuesday, when culture minister Richard Caborn is expected to confirm the change.
Casinos open 24 hours
Immediate access for public
Betting allowed on Good Friday and Christmas Day
A new criminal offence of inviting, permitting or causing a child to gamble
Compulsory age checks by gambling websites
Allowing casinos to advertise
The clause dealing with "super casinos" was meant to be discussed on Thursday last week, but was delayed because the DCMS was "still reflecting on the... concerns that have been raised".
Shadow Culture Secretary John Whittingdale said: "If the government had been willing to listen earlier then the current shambles might have been avoided," he said.
A Gamblers Anonymous spokesman said the concessions were positive, but more help was needed for people addicted to gambling.
The government says the bill is designed to implement a tough regulatory regime, which will protect the vulnerable and children.
But critics have argued the bill, which will allow the "super casinos" with up to 1,250 slot machines offering unlimited prizes, could lead to a rise in the levels of gambling addiction in the UK.
They also fear it could lure more dangerous criminals into the British gambling industry.