Theresa May has backed away from a pledge to require companies to put worker representatives on boards.
Speaking to the CBI's annual conference, Mrs May said firms would not be forced to adopt the controversial proposal.
"This is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards," she said.
Mrs May's pledge had met with a cool response from business lobby groups.
The prime minister said there were "other routes" that used existing board structures, but supplemented by advisory councils or panels.
"It will be a question of finding the model that works," she said.
Mrs May promised to shake-up corporate governance as part of her Conservative Party leadership campaign in July, and repeated the promise at last month's party conference when she said she planned to have "not just consumers represented on company boards, but workers as well".
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