European Commissioner for Agriculture Dacian Ciolos reversed the original decision to ban reusable bottles to prevent restaurateur from using sub-standard oils, a practice allegedly widespread.
He says that his decision to turn back on the proposed ban showed he was open to current debate on the topic.
Many restaurant owners objected to the move as it would have prevented them buying olive oil from locally-sourced or artisan producers.
The legislation would have required bottles to have a tamper-proof lid and to clearly display the ingredients; essentially how they appear when shop-bought.
Industrial olive oil producers have attacked the withdrawal of legislation saying it went through the correct legal processes.