Plans to disrupt this weekend's Jubilee celebrations have been called off after the taxman took action to defuse anger over levies charged for disposing of waste.

Skip operators were threatening to mount roadblocks in protest against a sudden increase of 2,500% in the taxes they pay for dumping waste in landfill, which they said was driving companies out of business.

New HM Revenue and Customs guidance issued last week sparked a wave of concern throughout the industry after some tips started levying the tax at £64 a tonne, rather than the £2.50 charge that was previously applied.

But HMRC said that the massive hike was based on a misunderstanding, and issued new guidance to the industry to make clear how the levy should be applied.

They insisted that Landfill Tax rates had not changed, and that last week's guidance had been intended simply to ensure that site operators applied them correctly. Following the move, the man behind a petition against increases in the tax issued a plea to the industry to call off Jubilee weekend protests.

In a message on the petition website, the chairman of the Plant and Waste Recycling Show, Richard Hunt, called for "all plans of roadblocks to be stopped immediately", adding: "I repeat, there should be no disruption to the Queen's Jubilee, please call off all plans with immediate effect."

But he told the Press Association that the confusion could have been avoided if there had been consultation with the industry before the guidance was issued. "The people who make these decisions do it without realising the implications and understanding how the industry works," said Mr Hunt. "They need to do a proper consultation with the experts in the trade."

Labour claimed it as another Government U-turn, following Treasury climbdowns over tax on pasties, caravans and charities earlier in the week.

Shadow chief secretary to the Treasury Rachel Reeves said: "With four tax U-turns in a week when Parliament is not sitting George Osborne is clearly in a complete mess. Construction has been hard hit and this muddle at a time when we are in a recession demonstrates a damning recklessness with jobs at the worst possible time."

But the Treasury said that ministers were not involved in the issue, which was "an operational matter for HMRC".