Innogy Renewables UK Ltd had been proposing a hydroelectric scheme on the River Conwy, near Betws y Coed in Snowdonia National Park.
But on Wednesday it said it had decided to shelve the Conwy Falls project.
The application had been due to be considered by Conwy council planning committee next week.
Innogy Renewables UK said the decision to withdraw the application was made following a late request for additional information.
It said that Natural Resources Wales' river basin management plan for western Wales had been updated last December, including a change to the sensitivity of salmon fisheries, following which further information had been requested.
The project, providing power to 3,200 households, attracted opposition from environmentalists, anglers, canoeists and businesses.
The firm has previously said it would have had a positive impact on the environment but campaigners were worried half an acre of the centuries-old Fairy Glen Wood would be destroyed by the build.
In March, the park's authority turned the plans down, asking for clarification on "minor issues".
Innogy Renewables UK Ltd said it would now consider its next steps.
Conservation charity the Snowdonia Society said it was "relieved that the immediate threat to the wonderful Conwy Falls and Fairy Glen has passed, but concerned that it could resurface yet again".
Controversial plans for a £12m renewable energy project at a Conwy county waterfall beauty spot have been withdrawn.