Westminster Council has put its plans for a so-called ‘tourist tax' on hold, amid opposition to the idea.
The chief executive of the Conservative-led council Stuart Love told members of the Westminster Property Association that the borough was in the "embryonic" stages at looking at a levy on hotel guests, although there were few details on how it would work.
The comments prompted opposition from hospitality groups, including UK Hospitality chief executive Kate Nicholls, who said such a tax "would only damage businesses already crippled by rising costs".
Nick Varney, chief executive of Merlin Entertainments and chairman of UKHospitality, said: "We are only just recovering from the terrorist impact and before that the strong pound in 2015/early 2016.
"Add to that Brexit, double the VAT of other EU countries and Byzantine visa requirements for Chinese tourists, and we are not exactly welcoming."
However, following Love's comments, Westminster City Council deputy leader David Harvey said any plans would be put on hold, despite the fact that the council continues to be enthusiastic about the idea.
Harvey said: "London is a world-class city to visit, attracting millions of people a year. We think it is reasonable to ask those visitors to fund the services they have a direct impact upon, such as street cleaning and traffic management.
"However, with uncertainty over Brexit, we understand that now is not the best time to implement a new tax.
"We want this idea to be on the table and part of a discussion about how we create a fair playing field, which balances the needs of businesses, residents and visitors across London."
Westminster Council is not the only authority in the capital to have considered such a tax. Camden Council is also considering a levy although it has not produced concrete plans yet.
A Camden Council spokesperson said: "Discussions are still at an early stage and there are no firm proposals as yet."