President Klaus Iohannis blasted the government over the decree that would have effectively shielded dozens of public officials from prosecution
Although the government has promised to repeal the controversial decree legalising corruption, there are several loopholes.
Prime Minister Sorin Grindeanu said that his government would not consider any further initiatives similar to the rescinded decree, that supported graft.
The protests against the decree were the largest in Romania since 1989 when dictator Nicolae Ceausescu was overthrown, under whom bribery was common.
The government also declassified the transcript of debates when the decree that would have shielded dozens of politicians from prosecution was approved.
The decree would have exempted abuse-of-power offences involving sums below 200,000 lei from prosecution – shielding hundreds of officials from justice.
250,000 people took to the streets in Bucharest on Wednesday as cracks emerged in government unity.
The number of protesters reached between 130,000 and 150,000 outside the cabinet building in Bucharest.
A proposal which aims to decriminalise certain corruption offences and pardon convicts has been criticised by the Romanian Supreme Court and various civil rights groups.
The party campaigned on a promise to cut taxes and raise spending on public wages and pensions, in the hope of winning the support of the mostly poor rural electorate.