Norway, which was expected to announce that it would introduce the tax at a meeting of the Leading Group on Solidarity Levies to Fund Development in Oslo this week, has now said it will not do so.
The campaign in the UK is being spearheaded by Stamp Out Poverty, a network of development agencies and charities. It argues that a levy of 0.005 per cent on sterling foreign exchange transactions could raise vital funds to help the country achieve its Millennium Development Goals.
David Hillman, coordinator of Stamp Out Poverty, said that Norway's refusal to implement the levy was frustrating.
"Norway has a great reputation for being progressive, championing the cause and going first," Hillman said. "We needed this to happen in order to demonstrate that the levy would not have a negative impact on financial institutions, which are currently opposed to it."
The Norwegian foreign affairs department declined to comment.