SHANGHAI (REUTERS) - Shanghai has put on hold a new policy allowing police to revoke the "hukou", or household registration, of the city's citizens who hold foreign passports or residency permits, following public outcry.

Shanghai residents who hold foreign passports or settle abroad are required to cancel their Shanghai hukou and a tweak to that policy due to take effect in May empowered police to revoke the hukou of anyone who refused.

A vestige of the planned economy, the hukou system assigns each Chinese citizen a jurisdiction of residence that determines their access to education and other social welfare services.

Hukou registrations can be hard to change and the system has been a lightning rod for controversy in a free-wheeling economy powered by mass internal migration.

Critics say it disadvantages the hundreds of millions of people from rural areas who work in cities but don't have residency status.

The Shanghai Public Security Bureau said on Sunday (March 25) online that because implementation rules had not been enacted and the precise meaning of "establishing residency abroad" remained undefined, it would refrain from enforcing the policy.

"At this stage, Shanghai public security organs will not cancel the hukou of people who have established residency abroad," it said.

The Global Times newspaper reported last week that the new rule was introduced to counter a rise in dual nationality, which China does not recognise.

Hukou in major cities like Shanghai and Beijing are coveted by outsiders and jealously defended by locals.

"It's not like we aren't paying taxes in China. Why should we be condemned by the public for holding a green card?" said one person on the popular Weibo microblog.

Another said: "As long as they haven't taken foreign citizenship, green card holders are still Chinese citizens, so why should they be forced to give up their hukou?"

But some painted those able to gain foreign residence but hoping to keep their Shanghai hukou as wanting to have their cake and eat it.

"Green card holders are two-faced," said a user with the name Xiaoshen5911.

"The point of having both the green card and Shanghai hukou is to help them escape the rule of law. Our country should not only cancel their Chinese hukou, but also freeze their bank account to prevent them from moving their money abroad."