Officials in Gongan county in central Hubei province were encouraged to smoke over 230,000 packs of locally produced cigarettes a year, the Hubei-based Chutian Metropolis Daily reported Sunday.
Departments whose officials smoked cigarettes from outside the county were to be fined, it said.
The article on the newspaper's Web site did not say how many officials were in the county or how much tax revenue would be raised.
A notice on the Gongan government Web site Tuesday said the rule was introduced in March in an effort to crack down on fake cigarettes and illegal cigarette smuggling in the area, which is harming consumers and causing the government to lose revenue, but said it decided to scrap the edict since the article appeared. It did not elaborate.
The government said it will still investigate the smoking habits of local government employees to see if any are smoking counterfeit cigarettes.
Smoking is tightly woven into the fabric of daily life in China, the world's largest tobacco market where about 2 trillion cigarettes are sold every year.
Tobacco sales, the biggest source of government revenue, brought in $61 billion in the first 11 months of 2008, up 18 percent from 2007, according to the Communist Party's People's Daily newspaper.
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