A controversial shake-up of the £2 billion legal aid scheme with contracts for work going to the lowest bidder has been effectively shelved.

Kenneth Clarke, the Justice Secretary, announced today that consultation on the scheme, due to start at the end of this year, had been postponed for two years, and will not be implemented before the summer of 2015.

The plans had run into sustained opposition from solicitors and barristers, who warned of the dangers of giving criminal legal aid work to the lowest bidder.

While ministers are tallking in terms of delay, the profession says that in reality the plans are now unlikely to proceed and alternative ways to modernise the legal aid scheme will be put forward.

The Bar Council and the Law Society, representing barristers and solicitors, both welcomed the delay, which they said would allow for more extended consideration of the impact of Mr Clarke?s proposals.

Mr Clarke also announced a six-month postponement until April 2013 in the planned abolition of the Legal Services Commission and its replacement with a new executive agency to run the legal aid scheme in England and Wales.

The introduction of revised eligibility criteria for legal aid in civil cases will also be put back from October 2012 to April 2013, along with the introduction of new contracts and an advice phone line for the delivery of civil legal aid.

Peter Lodder QC, the Bar chairman, welcomed the delay. He said: ?This reflects the concerns that the Bar Council has raised for several years about the principles of price-based competition in the provision of these public services.

?The Bar has repeatedly argued for the need to maintain high quality advocacy, in the public interest, especially during this time of acute fiscal austerity and as significant changes in the provision of legal services are being made.?

Desmond Hudson, the chief executive of the Law Society, said:?Criminal defence firms will be grateful for the certainty that they have been given for the next three years; and in particular, firms that do both criminal and civil work will be glad only to have to consider changes in one part of the business over the next 18 months.

?The Law Society is keen to discuss its own ideas for reform of criminal legal aid and this new timetable will now give us the opportunity to discuss these with Government.?

In a statement to MPs, Mr Clarke said he continues to believe that competitive tendering ?is likely to be the best way to ensure long-term sustainability and value for money in the legal aid market?.

He added: ?Pressure on legal aid expenditure is likely to continue, increasing the need for further reform of the current arrangements for administratively-set remuneration rates in the absence of competition.

?The Government believes that tendering criminal defence work for competition, alongside regulatory changes, has the potential to significantly modernise legal aid provision, improve the service provided to legal aid clients, streamline the procurement process and deliver value for money for the taxpayer.?

Meanwhile, Mr Lodder said the Bar Council was ?very alarmed? at the prospect that the LSC could be abolished before the payment of a?substantial? backlog of fees owed to barristers - understood to run into millions of pounds.

?We note the delay in the abolition of the LSC but we remain very alarmed about the continuing and worsening problem of late payments ofadvocates? fees,? said Mr Lodder.

?The Bar Council calls on the Ministry of Justice to ensure that the LSC is properly resourced to meet its continuing responsibilities. The Government should honour its obligation to pay members of the Bar for services they have provided - in some cases, very many years ago.

?The Government has affirmed the importance of timely payment to small businesses, but it is failing to set an example by allowing these appalling delays to continue.?

Mr Hudson said the Law Society had long argued that the October 2012 deadline for the LSC was ?impractical?.

?The Government has taken a sensible decision to defer this deadline,? he said.?The new timetable is still challenging, given the work required to implement changes of this magnitude.?

In a written ministerial statement yesterday, Mr Clarke said that the plans for competitive tendering for legal services, originally set out in November 2010, were thought to be the ?best way? to ensure ?long-term sustainability and value for money in the legal aid market.?

?Pressure on legal aid expenditure is likely to continue, increasing the need for further reform of the current arrangements,? he said.

Competitive tendering of legal aid work had the potential significantly to modernise legal aid provision, improve the service to legal aid clients and deliver value for money to taxpayers, he added.

But the development of a competition strategy would have a substantial impact on the market for legally aided services and would require?significant levels of engagement between the Government and the profession?.

Discussions would therefore start in early 2013 once other reforms had had ?time to bed down?.

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