Liquor law changes which would have closed Auckland suburban bars before midnight will be scrapped after receiving a hostile reception from the hospitality industry.

Auckland City mayor John Banks and Aaron Bhatnagar, the councillor steering the changes through the council, decided at the weekend to abandon the changes.

Mr Bhatnagar will meet hospitality industry representatives in Auckland this morning to tell them of the decision.

Publicans in suburban Auckland reacted angrily to the possibility of having to close at 11pm, or midnight with an extended licence.

Bars and restaurants in central Auckland and entertainment precincts such as Ponsonby Rd and Parnell Rd also faced tough restrictions, such as having to have security guards late at night and - for premises with a 24 hour licence - provide free food to people buying liquor after 3am.

Mr Banks, who wants to be the first mayor of the Super City next year, said he had no doubt the liquor issue would have damaged a key constituency - the hospitality industry - with which he had a long association.

He said yesterday that the first lesson of politics was to bail out when caught out.

The Mayor, who last month voted for the draft liquor law changes, said he had never seen such a violent reaction to a policy issue "and I have put an end to it".

Mr Bhatnagar blamed the "fatally flawed" policy on council officers.

He said the council would now wait for the Law Commission's review of the Sale of Liquor Act, which is due in March.

City Vision leader Richard Northey said that rather than panic, Mr Banks and Mr Bhatnagar should have continued the process, listened to all sides of the argument and addressed issues with widespread support, such as the opening hours and location of off-licence alcohol outlets.

Alcohol Advisory Council chief executive Gerard Vaughan was surprised the policy was being dumped in the middle of public consultation, which was to run until October 7.

"We know that reducing hours is an effective means of reducing harm from alcohol," he said.

Publicans were elated at the change.

Maureen Gordon, whose Kings Arms music venue in Newton would have been shut at 11pm, said the policy was unworkable.

"It would have sent good publicans to the wall. It would have been fatal for us," she said.

The managing director of Barworks, John Hellebrekers, said the council should have consulted the on-licence industry properly before introducing the draft policy.

Mr Hellebrekers, whose company owns seven businesses in Auckland City and has renovated The Dominion bar and restaurant near Eden Park, faced not being able to cater for diners after rugby matches.

Hospitality Association northern regional manager Sara Tucker said the decision was a triumph for common sense.

"The policy would have seriously impacted on hundreds of businesses and jobs while not contributing to the reduction of alcohol related harm," she said.

Inspector Andrew Coster, of Auckland City police, said police would keep working with the council on measures to improve the way the sale and supply of alcohol was managed.

Mr Coster said there was some sense in waiting for the Law Commission's review, which would probably result in a clearer framework within which councils could devise liquor policies.