The video sharing platform was looking at the proposed change as a way to make the ID check more rigorous to rid the site of impersonators, but many saw it as a way to strip established streamers of their standing on the site.
YouTube boss Susan Wojcicki has apologised and admitted the the policy change "missed the mark".
She tweeted: "To our creators & users-I'm sorry for the frustration & hurt that we caused with our new approach to verification.
"While trying to make improvements, we missed the mark. As I write this, we're working to address your concerns & we'll have more updates soon."
In a blog post, the company later announced it would be largely reversing the changes.
It said: "We heard loud and clear how much the badge means to you."
However, while all channels currently with the verification badge will keep them, in the future they will no longer be automatically granted to any channel passing 100,000 subscribers.
Instead, only those that need to guarantee their identity - because they represent a brand in danger of being impersonated on a wider scale - will be eligible.