Peru's Congress has voted to repeal two land laws aimed at opening up Amazonian tribal areas to development, which led to protests by indigenous groups.
Correspondents say the repeal of the laws is a blow to President Alan Garcia, who had approved the legislation by decree.
Mr Garcia had described the initiative as pivotal to the improvement of life in Peru's poorest regions.
A leading indigenous rights campaigner welcomed the repeal of the laws.
Alberto Pizango called it a new dawn for the country's indigenous peoples.
During the protests, which lasted more than 10 days, indigenous groups took several police officers hostage, and took control of both a major natural gas field in southern Peru and an oil pipeline.
'True democracy'
Congress repealed the laws by 66 votes to 29.
Speaking before the vote, Roger Naja, president of the National Commission for Andean, Amazonian and Afro-Peruvian Peoples, had urged Congress to vote to rescind the laws.
History, he said, would remember Friday as "the day that the disappearance of the indigenous communities in the jungles and mountains was avoided".
Mr Pizango, leader of the Inter-Ethnic Association of the Peruvian Forest (Aidesep), hailed the repeal as "a moment of true democracy and true inclusion".
"This is a new dawn for the people of this country, and for all Peruvians who wish to develop in freedom, not in oppression," he said.
On Wednesday, President Garcia had warned the repeal would be "a very serious, historic mistake".
"If that were to happen out of fear of protesters, fear of unrest, Peru would some day remember it as the moment when change came to a halt and hundreds of thousands of people were condemned to poverty, exclusion and marginalisation," he told reporters.
The laws would have allowed the sale of tribal lands by a simple majority vote in a community assembly, which the protesters say would make it easier for big energy companies to grab their land.
Around 70% of Peru's Amazon is leased for oil and gas exploration and many of its tribal people say they do not want the companies on their land, the BBC's Dan Collyns reports from the Peruvian capital Lima.
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