But the US president ask authorities to go ahead with collecting data on immigrants to determine who is a legal citizen.
US President Donald Trump abandoned his controversial bid to inject a citizenship question into next year's census on Thursday, instead directing federal agencies to try to compile the information using existing databases.
He insisted he was "not backing down," declaring that the goal was simple and reasonable: "a clear breakdown of the number of citizens and non-citizens that make up the United States population."
But the decision was clearly a reversal, after the Supreme Court blocked his effort by disputing his administration's rationale for demanding that census respondents declare whether or not they were citizens.
Trump had said last week that he was "very seriously" considering an executive order to try to force the question.
But the government has already begun the lengthy and expensive process of printing the census questionnaire without it, and such a move would surely have drawn an immediate legal challenge.
Instead, Trump said that he would be signing an executive order directing every federal department and agency to provide the Commerce Department with all records pertaining to the number of citizens and non-citizens in the country.
Trump's efforts to add the question on the decennial census had drawn fury and backlash from critics who complained that it was political, meant to discourage participation, not only by people living in the country illegally but also by citizens who fear that participating would expose noncitizen family members to repercussions.
Dale Ho, director of the American Civil Liberties Union's Voting Rights Project, and the lawyer who argued the Supreme Court case, celebrated Thursday's announcement by the president, saying: "Trump's attempt to weaponise the census ends not with a bang but a whimper."
Civil rights groups said the president's efforts had already sown fear and discord in vulnerable communities, making the task of an accurate count even harder.
"The damage has already been done," said Lizette Escobedo of the National Association of Latino Elected and Appointed Officials Educational Fund.
Trump had offered multiple explanations for why he believed the question was necessary to include in the once-a-decade population count that determines the allocation of seats in the House of Representatives for the next 10 years and the distribution of some $675 billion in federal spending.
If immigrants are undercounted, Democrats fear that would pull money and political power away from Democratic-led cities where immigrants tend to cluster, and shift it to whiter, rural areas where Republicans do well.