A-level and GCSE students will be awarded the grades estimated for them by their teachers, the Welsh Government has announced.
Last week's A-level results were criticised after 42% of grades were lower than teacher assessments.
It came after they had been processed by an algorithm.
Students in England and Northern Ireland will also have their results based on teacher estimates, in decisions taken on the same day.
It comes after pupils in Scotland had their exam results upgraded last week.
Exams were cancelled across the UK after schools shut in March because of the coronavirus pandemic.
Last week's results in Wales were produced by a process known as standardisation - designed to ensure grades were "as fair as possible" and consistent with previous years.
But it was criticised by students and politicians for producing unfair grades for individual students.
Welsh Education Minister Kirsty Williams said she took the decision to accept teacher estimates instead to maintain confidence in the system.
It also affects AS-levels, skills challenge certificates and the Welsh Baccalaureate.
But students who received higher grades than those predicted by teachers will keep them.
GCSE results in Wales are due to be published on Thursday.
What do pupils think of the change?
Emily Mundy, 18, from Anglesey, had faced losing her medical school place at either Manchester or Birmingham, after her chemistry exam was downgraded from A to B.
She said she felt "overwhelmed and excited" following the Welsh Government's U-turn.
"I got excited and I quickly rang Manchester University. They said I need to send the [teacher- assessed] grades to UCAS and I should be accepted," she said.
"I couldn't really believe it. It's felt like a long time since Thursday where I thought I was going to have to do something else. It means that I'll be able to get the career I wanted and the opportunity to help people."
David Mazoya, a 16-year-old GCSE student at Newport's Llanwern High School, was relieved: "It felt at first like we would be assessed on how other people had done in the past and our school average.
"It wasn't really our work, it wasn't really my grade either."
But Scott Gilmour, an A-level student at Llanfair Caereinion school in Welshpool, said he feels "nobody has a result that means anything".
He received two A*s and two As through the original algorithm method, and is going to Durham to study Law.
"This U-turn by the government strips the results we've had of any value and credibility. It now means the national average for A-level results this year will be way above previous years," he said.
What did the education minister say?
Ms Williams said that "given decisions elsewhere, the balance of fairness now lies with awarding centre assessment grades to students, despite the strengths of the system in Wales".
"It is clear that maintaining confidence in our qualifications whilst being fair to students requires this difficult decision," she said.
The Lib Dem minister, serving in the Labour Welsh Government, promised an independent review of the events "following the cancellation of this year's exams".
The announcement followed calls for predicted grades to be honoured from Labour politicians in the Welsh Parliament, as well as Welsh Conservatives and Plaid Cymru.
What has the reaction been?
Exam watchdog Qualifications Wales, which oversaw the grade standardisation process that led to last week's results, said it was "working through the details and impacts of this announcement".
"We know that this is an extraordinarily difficult and upsetting time for learners, parents and their teachers, and there are many questions that we do not currently have answers to," it said in a statement.
Plaid Cymru education spokeswoman Sian Gwenllian said the announcement was "seriously overdue" and called for a "full investigation into this debacle".
"The Welsh Government should apologise to students, teachers and schools for what they've put them through over the past few weeks," she said.
Suzy Davies, education spokeswoman for Welsh Conservatives, welcomed the education minister's review.
"It is reassuring that the minister has listened to the Welsh Conservatives and other parties in the Welsh Parliament, but especially pleasing that she heard the voices of young people up and down the country," she added.
The Welsh Local Government Association, which represents councils, welcomed the announcement.
"This is the fairest approach, trusts the professional views of teachers and will ensure that Welsh students are not disadvantaged compared to students elsewhere in the UK," it said.
The momentum building against the A-level grading mechanism made this climbdown look inevitable even before it was announced.
So why did it take ministers so long to get there?
Kirsty Williams and other cabinet colleagues had nailed their colours to the "robustness" of the system in Wales - the implication being that it was more credible than other parts of Britain because actual exam results (the AS levels) were factored in here, unlike elsewhere.
But as the inboxes of members of the Senedd filled with tales of individual injustices against students who will have the vote for the first time in next year's Senedd elections, that position became unsustainable - especially with GCSE results looming fast.
'The right decision has been made'
Professor Sally Holland, children's commissioner for Wales, had been among those calling for pupils to be given their estimated grades.
She said the right decision had been made: "Let this be evidence that our young people are active citizens in Wales. Thanks to each and every one of you for making your voices heard."
Laura Doel, director of National Association of Headteachers Cymru, said: "In the current circumstances it is right to trust the professional judgement of the people who know their students best, their teachers."
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GCSEs and A-level exams: Estimated results to be used for Welsh grades - BBC News
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