The proposal had drawn fierce opposition from lawmakers, airlines and others who said it would place passengers and crews at risk.
John Pistole tells The Associated Press that dropping the proposal allows his agency to focus on other programs.
Last month 145 House members signed a letter asking Pistole to keep the current policy that bars passengers from carrying aboard knives and other items.
When Pistole released the proposal in March, he said the knives couldn't enable terrorists to cause a plane to crash.
TSA screeners confiscate over 2,000 of the small folding knives a day from passengers.
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