'No block' on other RBS bonuses.
Downing Street said ministers will not attempt to "micro-manage" the largely state-owned bank. It is for the board to set bonuses and for individuals to decide whether to accept them, said a spokeswoman.
But Labour leader Ed Miliband insisted that Mr Hester's decision to waive an award worth almost £1 million did not draw a line under the issue of City pay.
Labour will use an opposition day debate in the Commons next Tuesday to urge Conservatives and Liberal Democrats to back a £2 billion tax on bankers' bonuses, which they say could fund the creation of 100,000 jobs elsewhere.
A senior party source said: "This debate is about more than Stephen Hester. It is time for the Conservatives and Lib Dems to show they are serious about tackling the bonus culture by supporting our plan to repeat the bank bonus tax.
"The banks, who helped create the financial crisis, must now help return our economy to growth. We need a bonus tax, we need to give employees a say on top pay in every company, and we need to change the rules and culture so that bonuses are a reward for exceptional performance rather than what you get for doing your job."
Labour had initially planned to use next week's debate to force a vote calling for Mr Hester to be stripped of his bonus, and Mr Miliband said it was this threat which persuaded the RBS boss to give up his £963,000 shares package.
Ministers, including Chancellor George Osborne, welcomed Mr Hester's announcement. He said: "This is a sensible and welcome decision that enables Stephen Hester to focus on the very important job he has got to do, namely to get back billions of pounds of taxpayers' money that was put into RBS."
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| Stephen Hester has waived his 1 million pounds bonus, but ministers said they will not force other RBS executives to do the same |
Business Secretary Vince Cable said: "This is a welcome announcement and a positive step towards curbing the bonus culture. RBS should now focus on what the bank should be doing, which is lending to good British companies."
Unite union national officer David Fleming said: "This gesture goes some way in acknowledging the hypocrisy of an organisation which has sacked over 21,000 staff, while still attempting to pay bumper bonuses to the bosses."
