New laws on the treatment of the Armed Forces have been delayed, prompting speculation that ministers are about to retreat over the military covenant.
Osama bin Laden's death could hasten the withdrawal of British troops from Afghanistan, David Cameron has hinted.
The Coalition has postponed a Commons vote on the Armed Forces Bill.
Ministers have been under fire because the Bill does not formally enshrine the covenant - a guarantee of decent treatment - in law.
David Cameron last year promised to fix the covenant in law, legally obliging ministers to enact its promises.
But the Bill proposed to MPs only requires ministers to report on their progress in implementing the covenant, and puts no obligations on the Government to enact the promises.
The Bill has faced growing criticism from the Royal British Legion and the Labour Party.
Phillip Hollobone, a Conservative MP has also said he will to try to amend the Bill to put a clear legal obligation on ministers.
A final Commons vote on the Bill had been due next Wednesday, but has now been delayed.
The postponement, which was announced on Thursday as MPs concentrated on the AV referendum, sparked predictions that ministers are preparing to make concessions.
The covenant is the traditional agreement between the nation and the Services that military personnel and their families will be properly treated.
Last year, Mr Cameron told Armed Forces personnel he would give them "a new military covenant that's written into the law of the land."
The Royal British Legion has led criticism of the Government's plans.
During the debates on the Bill, the RBL wrote to every MP in the Commons making clear that it rejects the Coalition's plans on the military covenant.
Jim Murphy, the Labour shadow defence secretary, said the delay was "extraordinary news".
He said: "In the face of a massive rebellion from the defence community and MPs from all sides of Parliament the Government is running scared. I hope that this is a sign they are thinking again and will now honour their commitment to enshrine the covenant in law. If they do it will be a stunning but welcome u-turn.
"At a time of defence cuts and greater obligations for our Forces overseas this is important now more than ever.
The Ministry of Defence last night insisted that the Government was doing more than any of its predecessors to honour the covenant.
"This is the first time that the existence of the covenant will be recognised in statute," a spokesman said. "We are in the process of finalising the text of the military covenant and once it is ready for publication, will look to hold the [bill's] third reading."
- Daily Telegraph article, by James Kirkup, Political Correspondent 11:20PM BST 05 May 2011: Armed Forces vote delayed
- Guardian: Armed forces bill dropped as ministers 'duck covenant pledge' - "MPs denied vote on enshrining military code in law as pressure mounts on David Cameron over promises to services"
- Daily Mail: Government accused of U-turn over the military covenant
- Defence Management Journal: Coalition 'running scared' on covenant
- (NEW) BFBS British Forces News: Armed Forces Bill delayed