President Donald Trump will no longer seek to add a citizenship question to the 2020 US Census questionnaire.
Instead, he said that he had ordered officials to obtain the information through a decree of the government agencies, as the lawsuits would have delayed the census.
"We will not neglect anything," said Trump.
The retreat comes after a long battle for the inclusion of the issue, which the Supreme Court had blocked in June.
"We are not going backwards in our efforts to determine the status of US citizens in the United States," said the US president.
The order will require government agencies to hand over citizenship documents.
"Thanks to today's order, we will be able to ensure that the 2020 census generates a precise count of the number of citizens, non-citizens and illegal aliens in the United States of America. America, "said Mr. Trump at the White House.
Kristen Clarke, chair of the National Committee of Lawyers for Civil Rights under the law, told the BBC that she was concerned about Mr. Trump's plans.
"It's essentially an attempt to compile large-scale data in an unprecedented way," she said. "We do not know how long it will take them to gather this data, we do not know what they will do with this data."
What reason did the Trump administration give?
The decision to abandon the issue of citizenship was a "logistical and non-legal obstacle," said Attorney General William Barr, alongside President Trump.
He added that the administration "was quite right" to include the issue of citizenship.
But referring to the court's injunctions, he said there was no way to "implement a new decision without jeopardizing our ability to conduct the census".
The census questionnaires without the citizenship question are already being printed.
Mr Barr has repeatedly congratulated Mr Trump on the decree.
How did the battle unfold?
Late last month, the Supreme Court remanded the case to the Census Bureau in a judgment from April 5 to April 4, which indicated that the reason for the inclusion of the question seemed "artificial".
Government lawyers said they had dropped the issue and officials began printing the 2020 census without it.
But Mr Trump then announced that he might consider a decree to include the issue or find other ways to go ahead.
Legal experts have noted that a decree could not overrule a Supreme Court decision.
Never one to admit defeat
Peter Bowes, BBC correspondent in North America
In an election year, a question on citizenship on the 2020 census form would have been extremely polarizing.
For Donald Trump, whose stance on illegal immigration has defined his presidency, this would have been a major success.
But this is not to be. Obstacles proved too cumbersome and the administration acknowledged that pending prosecutions could delay the completion of the census.
Trump, who has never admitted his defeat, presented his plan B as a "much more accurate" way of counting the non-citizen population. The officials, he said, "will not neglect any stone" in their quest to extract information on citizenship from existing data held by ministries.
This could be perceived as an implicit threat, but this means that the census will likely result in a more accurate count, as people living illegally in the United States are less afraid to come forward.
Census figures are used to determine the distribution of seats in the House of Representatives and the distribution of billions of dollars in federal spending.
It was feared that impoverished areas would be lost if a significant number of residents chose not to complete the form.
The question of citizenship has not been included in a US census for all Americans since 1950, although it was asked of certain subsets of the population between 1970 and 2000.