Fuel taxes had been set to rise on January 1.
The "yellow vest" protests began November 17 over the government plan to raise taxes on diesel and gasoline, but by the time Macron bowed to three weeks of violence and abandoned the new fuel tax, protesters were demanding much more.
The price increases for the utilities will be suspended for six months, said Prime Minister Edouard Philippe, but leaders of the demonstrations in which hundreds of thousands have donned yellow safety vests were dismissive of the gesture. But instead of appeasing the protesters, it spurred other groups to join in, hoping for concessions of their own.
Student protests and planned trade union strikes in the energy and port sectors next week underscored the risk of contagion.
Turnout for the protests had fallen from about 280,000 three weeks ago to 136,000 last Saturday, with some of the violence, vehicle burning, spray painting and damage to Paris' historic monuments alienating supporters.
So after nightfall Wednesday, as parliament debated the 2019 budget, Macron's government suddenly gave in.
Macron had made cutting wealth taxes a key campaign pledge ahead of his election in May 2017, arguing such levies discourage investment and drive entrepreneurs away. More protests are planned for Saturday in Paris.
Macron and his government appealed for calm Wednesday, and signalled it was ready to make further concessions to avoid more violence.
Macron and Philippe's approval ratings hit new lows in the wake of the crisis.
On Tuesday, representatives of the Yellow Vest movement said the temporary freeze on the tax proposed by the French prime minister was simply not enough. A joint statement from the CGT and FO trucking unions called for action beginning Sunday night to protest a cut in overtime rates, and asked for an urgent meeting with the transportation minister.More news: Sensitive internal Facebook documents published by UK Parliament
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One of the demands from the protesters, who are mostly from rural or small-town France, is a repeal of Mr. Macron's move previous year to cut the ISF "fortune tax" which was previously levied on high-earners. Police used tear gas to control crowds.
The Elysée also confirmed the announcement to network France 24.
"We need taxes, but they are not properly redistributed", protester Thomas Tricottet told BFM television.
In the port city of Marseille, students clashed with police outside a high school - one of about 100 high schools around France that were blocked or otherwise disrupted by student protests, according to the Education Ministry.
French President Emmanuel Macron has scrapped a fuel tax rise amid fears of new violence, after weeks of nationwide protests and the worst rioting in Paris in decades.
He has refrained from speaking publicly about the protests and has largely remained in his palace.
"This decision should have been taken from the start, as soon as the conflict emerged", said prominent Socialist figure Segolene Royal, a former candidate for president, adding: "The more you let a conflict fester, the more you eventually have to concede".
The movement has grown to reflect a range of grievances, including the marginalisation of rural areas, high living costs, and general anger at President Macron's economic policies.
It marked the first major U-turn by Macron in his 18-months in office, at a time polls show that barely one in five French people think he is doing a good job.
Elaine Ganley, Alex Turnbull and Catherine Gaschka in Paris contributed.