A-level and GCSE students will be awarded the grades estimated for them by their teachers, the Welsh Government has announced.
The U-turn followed criticism from students, opposition politicians and Welsh Labour backbenchers.
Education Minister Kirsty Williams said she took the decision to maintain confidence in the system.
An announcement is expected in England later, after a change to use predicted grades for Northern Irish GCSEs.
The Scottish Government last week decided to upgrade exams results there, accepting teacher estimates of scores, following an outcry.
In Wales, a total of 42% of A-level grades predicted by teachers had been lowered when results were published last week, after they had been processed by an algorithm.
The change to accept teacher estimates also affects AS-levels, skills challenge certificates and the Welsh Baccalaureate.
But students who received higher grades than those predicted by teachers will keep them.
Poppy Stowell-Evans, 16, had been very anxious waiting for her GSCE results this Thursday.
The Llanwern High School student wants to stay on at her Newport school's sixth form, and had worried that results from previous years might have had a negative impact on hers.
She told BBC Wales: "I feel very relieved. I think this way it will be much fairer and I think it shows the Welsh Government trust in our education system and the educators who have taught us all throughout our high school experience, and really know what we are capable of.
"I was incredibly concerned, partly because it was completely out of my control and partly because I didn't feel it was just for an algorithm that has never seen any of my work, never seen me in school, never seen my potential, to judge what grades I would be eligible for. And that really scared me."
Ms Williams said that "given decisions elsewhere, the balance of fairness now lies with awarding centre assessment grades to students, despite the strengths of the system in Wales".
The Lib Dem minister, serving in the Labour Welsh Government, promised an independent review of the events "following the cancellation of this year's exams".
Last week's results were produced by an algorithm designed to ensure grades were "as fair as possible" and consistent with previous years.
But it was criticised for producing unfair grades for individual students.
The announcement followed calls for predicted grades to be honoured from Labour politicians in the Welsh Parliament, as well as Welsh Conservatives and Plaid Cymru.
First Minister Mark Drakeford is expected to meet Welsh Labour backbenchers to hear their concerns later.
Plaid Cymru education spokeswoman Sian Gwenllian said the announcement was "seriously overdue" and called for a "full investigation into this debacle".
"The Welsh Government should apologise to students, teachers and schools for what they've put them through over the past few weeks," she said.
Suzy Davies, education spokeswoman for Welsh Conservatives, welcomed the education minister's review.
"It is reassuring that the minister has listened to the Welsh Conservatives and other parties in the Welsh Parliament, but especially pleasing that she heard the voices of young people up and down the country," she added.
The momentum building against the A-level grading mechanism made this climbdown look inevitable even before it was announced.
So why did it take ministers so long to get there?
Kirsty Williams and other cabinet colleagues had nailed their colours to the "robustness" of the system in Wales - the implication being that it was more credible than other parts of Britain because actual exam results (the AS levels) were factored in here, unlike elsewhere.
But as the inboxes of members of the Senedd filled with tales of individual injustices against students who will have the vote for the first time in next year's Senedd elections, that position became unsustainable - especially with GCSE results looming fast.
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2020-08-17 14:26:15Z
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