In a televised address, Lam said the government "will formally withdraw the bill in order to fully allay public concerns."
But she stopped short of meeting other demands protesters have made, including an independent inquiry of alleged police brutality, amnesty for arrested protesters and democratic reforms.
"Matters relating to police enforcement actions are best handled by the existing and well-established Independent Police Complaints Council, which was set up for exactly this purpose, and not by setting up an independent commission of investigation," Lam said.
Other than withdrawing the bill, which would have allowed the transfer of fugitives to China, the chief executive also laid out measures to solve problems -- adding new members to the Council and publicizing its report, reaching out to the community and hearing people's concerns, and setting up an expert group to study deep-rooted problems in society.
But she stressed that violence will not be tolerated.
"Some people, though not many, attacked the central government's office in Hong Kong and vandalized the national flag and national emblem. This is a direct challenge to 'one country, two systems'," she said, referring the formula under which Hong Kong, a former British colony, was returned to Chinese rule in 1997.
"We cannot agree or accept that violence is a solution to our problems. As such, the government has to strictly enforce the law against all violent and illegal acts. Let's replace conflicts with conversations, and let's look for solutions," she said.
A motion to withdraw the bill will be tabled in October when the legislature session opens.
Some protesters said the demonstrations will go on until all their demands are met.
The Civil Human Rights Front, which organized the million people matches, said it would be a "political misjudgment" if Lam continues to ignore people's desire for all the demands to be met and simply attempts to clean up the mess by withdrawing the bill.
Comment: Since it's pretty obvious that the protests started over the extradition bill, this is a pretty blatant attempt to piggyback additional demands riding on the popularity a single issue. Since the majority of the (peaceful) protesters were protesting the extradition bill, Lam's response is reasonable.
"It's a good start for the chief executive to, for the first time, positively respond to the people's demands," according to group convener Jimmy Sham. But he said those who took part in the marches will not accept the deal and plan another march later this month.
Prominent young activist Joshua Wong said the withdrawal of the bill is "too little and too late now."
"The intensified police brutality in the previous weeks (has) left an irreversible scar to the entire HK society. And therefore, at this very moment, when Carrie Lam announced withdrawal, people would not believe it is a 'sincere' move," he said on Twitter.
"In short, Carrie Lam's repeated failure in understanding the situation has made this announcement completely out of touch - She needs to address to ALL Five Demands: STOP PROSECUTION, STOP CALLING US RIOTERS, INDEPENDENT INQUIRY OF POLICE and FREE ELECTION!"
Pro-democracy lawmakers similarly called Lam's "political act" unacceptable.
"The damage is done," lawmaker Claudia Mo said. "She thinks she can use some garden hose to put out a hill fire. My immediate impression is (the protesters) are adamant the five demands be met before their fight could, would stop."
Comment: We'll just have to see if they can pull the same numbers of protesters that they did originally. That should reveal something about the actual public opinion in Hong Kong.
Before Lam's announcement was aired, she had already conveyed her intention to withdraw the bill during a meeting with pro-Beijing lawmakers. Her decision came a day after she reiterated that she would not resign from office.
Lam had earlier suspended the legislative procedures on the bill, and declared it "dead."
But that failed to quell the protests that have entered their 13th week, including rallies, marches, strikes, occupation of roads, shutting down of the airport and increasingly frequent violent clashes with police.
In the almost daily protests since June 9, police have fired tear gas in addition to other non-lethal weapons and made more than 1,180 arrests.
Critics of the bill had feared that residents and visitors whom China considers its political opponents could be sent to the mainland for prosecution.
Comment: See also: