About 1.3 million Rohingya, a Muslim minority, live in Buddhist-majority Myanmar, where they are regarded as foreign interlopers from neighboring Bangladesh, and face widespread prejudice.
Hundreds of thousands instead hold temporary identity papers known as white cards.
On Tuesday, a bill was enacted with a clause that would give white card holders the right to vote in a proposed referendum on the country's constitution.
The move prompted protesters, including many Buddhist monks, to take to the streets of Yangon Wednesday, demanding that the law be revoked.
"You played the white card stupidly," read one protester's banner.
That evening, the office of President Thein Sein issued a statement saying that the white cards would expire at the end of March, canceling the holder's newfound voting rights, the state-run New Light of Myanmar newspaper reported
The statement said that white card holders would have two months from the expiry of their cards on March 31 to surrender them to authorities, who would then assess their citizenship status under the country's citizenship laws.
The president's office also said it would establish an advisory commission to look into the question of white cards, which it noted had "been an issue among the public."
In December, the United Nations passed a resolution urging Myanmar to give access to citizenship for the Rohingya, many of whom are subject to extreme discrimination.
Following waves of deadly communal violence in 2012, more than 100,000 people in Myanmar's impoverished Rakhine State are trapped in squalid internment camps which they are forbidden to leave
of their own volition -- officially for their own protection.
When the U.N.'s Assistant Secretary-General for Humanitarian Affairs, Kyung-wha Kang, visited Rakhine's camps in June, she described witnessing "a level of human suffering in IDP camps that I have personally never seen before."
Buddhist nationalists have been accused of stoking much of the anti-Rohingya sentiment
, with a prominent monk recently calling a U.N. official a "whore"
for her comments in defense of the minority.
But critics say while it has the potential to provide some Rohingya citizenship, it is likely to define hundreds of thousands as illegal aliens, to be eventually deported.
Myanmar is expected to hold a referendum on the country's constitution ahead of the general election scheduled for October or November.
Opposition leader Aung San Suu Kyi, whose National League for Democracy is favored to win at the polls, has been campaigning to change the constitution.
In its present form it allocates a quarter of parliamentary seats to the military, which ruled the country for nearly half a century.