The Chancellor threw savers a lifeline by safeguarding the current £7,000 annual tax-free ISA allowance for five years.
Gordon Brown announced last year that he would consult on proposed reductions on ISA limits, amid a wave of opposition to the plans.
But he gave the reassurance many were hoping for by extending the current levels until April 2010.
The news was immediately welcomed by the Investment Management Association ( IMA), which said the announcement would provide stability and promote confidence in the Government's flagship savings product.
Richard Saunders, chief executive of the IMA, said: "This announcement throws investors a lifeline by safeguarding the future of ISAs for now and we hope that it will encourage savers back into the ISA market.
"All eyes can now turn to the review that has been promised for 2006.
"We hope this will not just look at ISAs in isolation, but will tackle tax incentives and savings more broadly with a view to re-invigorating the Government's long-term savings policy."
Halifax, the country's largest savings provider, said a total of £8.8 million cash ISAs were opened in the last financial year, with a total of £19.4 billion invested.
"The average investment in cash ISAs in 2003/04 was £2,190, so today's decision will benefit a substantial number of savers," a spokesman said.
Richard Wastcoat, UK managing director of Fidelity Investments, the largest UK retail fund manager, said: "The decision to keep current ISA limits until 2010 is welcome and an important reminder that Government has a role to play in encouraging people to save for their future.
"We would also like to see the Chancellor restore the dividend tax credit for ISAs.
"We are in no doubt that the removal of the dividend tax credit has deterred some investors from taking out ISAs.
"The Chancellor should go a step further by raising the maximum contribution limits for ISAs, which we believe, will really boost savings.
"The ISA contribution levels have always been below those for PEPs, nor have the limits kept pace with inflation like many of the other allowances granted to the taxpayer."