The proposals to trim the number of Schiphol flights from 500,000 to 460,000 from next year faced too many legal headwinds, Infrastructure Minister Mark Harbers said in a letter to parliament.
A Dutch court blocked the plans in April and the European Commission, the United States, and Canada have also raised concerns, Harbers said.
"The government knows that suspending (the plans) is a bitter pill for the environment... I stress that the government is committed to striking a balance between Schiphol and its surroundings," the letter concluded.
Schiphol airport authorities said they were "disappointed" with the decision, "as local residents are getting the short end of the stick."
"It is time that hindrance for local residents is noticeably reduced," airport authorities said in a statement.
But airlines rejoiced.
Dutch flag carrier KLM said the decision was "an important step to prevent retaliation and to continue flying to the US."
Marnix Fruitema, head of the BARIN association of Dutch airlines, was quoted by local agency ANP as saying: "We are delighted that the minister has come to his sense in time."
The government said KLM had agreed to a series of measures that would come into force from March.
According to the minister, KLM had agreed to use its quietest aircraft at night and to avoid running passenger services between midnight and 6am.
KLM said it had agreed to a number of measures to reduce noise pollution at Schiphol, saying it "shares the government's environmental concerns and is fully committed to reducing its environmental footprint."
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