What was the bill about?
Any bribery offences below 200,000 lei ($48,000) would no longer be prosecuted. This would have shielded officials being accused of graft.
Romania is one of the poorest and most corrupt countries in Europe. Protesters said the bill had been tailor-made to grant amnesty to government officials convicted or accused of abusing their position.
Why are people so angry?
The bill had been passed last Tuesday without parliamentary approval and would have given corrupt officials a free pass. It would also have been a setback for Romania's anti-corruption crackdown, as almost 2,000 people, including a sitting prime minister, ministers and lawmakers, were prosecuted for corruption.
The head of the ruling Social Democrat Party, Liviu Dragnea, is one such offender. He was barred from serving in government after being convicted of voter fraud and is currently on trial for abuse of power, an allegation he denies. If the bill had not been repealed, Dragnea would have escaped prosecution.
In the biggest protests since the fall of communist rule in 1989, Romanians are demanding that Justice Minister Florin Iordache and other officials resign.
How did the government react?
Despite the demonstrations which continue across the capital, Iordache argues that it is the government's duty to make laws for judges and prosecutors to apply.
President Klaus Iohannis and Prime Minister Sorin Grindeanu have resisted calls that the government should step down.
Before scrapping it they defended the bill, saying they were merely bringing the law in line with an EU legal directive, and would ease overcrowding in prisons.
Why is scrapping the bill not enough?
The protesters want snap elections, having lost faith in their current government, only a month old.
Critics believe that the bill would legitimise corruption instead of holding politicians accountable for their actions.
"It's simply indefensible," said Laura Stefan, an anti-corruption specialist with the public policy think tank Expert Forum.
"How can you explain to the people of this country, who maybe don't make $50,000 in their lifetime, that it is okay for public officials to misuse their office in order to obtain less than $50,000 from the state budget."
The government also introduced a separate bill that will free about 2,500 prisoners serving sentences shorter than five years, excluding rapists and repeat offenders. This bill was passed.