The UK government has excluded small retailers from the proposed 5p carrier bag charge, which will come into force in England in October 2015.
Government noted that its proposals for England only apply to plastic bags.
The cross-party Committee's concerns about the problems that could be caused for the UK's recycling industry by the proposed exemption for biodegradable plastic bags have been listened by the government.
Ministers have accepted that it will not now be possible to include this exemption when the charge is introduced next year.
The cross-party committee chair MP Joan Walley said the 5p bag charge is the right solution, which will reduce litter, cut carbon emissions and reduce waste.
"Despite our Committee's recommendations, the Government has decided not to apply the charge across the board, but to go ahead with its proposed exemptions. That risks diluting the benefits of the charge," Walley added.
The committee said that Association of Convenience Stores, the National Federation of Retail Newsagents or the British Retail Consortium have not supported the proposed exemption for small retailers.
Ireland and Wales in 2002 and in October 2011 introduced a 5p charge, which resulted in significant reductions in use, according to the government.
