Pensions secretary, Iain Duncan Smith, wanted to stop OAPs in sunshine spots like Spain and Greece getting the payments, which are meant to help freezing Brits with the cost of heating.
He drew up the plans after Strasbourg, ruled all OAPs on the Continent deserved the cash, worth up to £300 a year, rather than just those who retired in the UK then moved abroad.
The shock last-minute decision will cost taxpayers around £30million a year by 2015-16 - more than trebbling the amount of winter fuel cash which goes abroad.
It means British pensioners in the Canary Islands, Ibiza, Majorca and even the French islands in the Caribbean will be entitled to the cash, even though they bask in winter temperatures up to 30°C.
A Downing Street spokesman said: The PM's view is clear: he made a commitment that we would retain these benefits and that they would stay in place. That's in the Coalition Agreement and there are no plans to change that.