Mr Waterson said he was 'fully intending' to vote against the proposal.
"However, in the face of strong Conservative opposition, the government has now been forced to drop the idea.
"I welcome this. I am in favour of greater transparency and have already followed David Cameron's lead in publishing more details of my expenses than the current rules require.
"I am surprised that our example has not yet been followed by Liberal Democrat MPs."
Mr Lloyd said that he was 'delighted' with the government's decision not to pursue the unpopular plan.
"If passed, this Order would have had a dreadful impact on the reputation of Parliament.
"I also note that the Prime Minister at Prime Minister's Questions on Wednesday obviously believed, rightly or wrongly that he had had an agreement with the Conservatives to exempt MPs from having to publish their itemised expenses.
"So to put the record straight on this vital issue I urge that our own local MP Nigel Waterson publish his detailed expenses at the earliest opportunity.
"If someone has nothing to hide they will have no problem in being totally open. Certainly I can pledge that if I'm elected as the MP for Eastbourne and Willingdon at the next General Election, the public can be assured that my expenses will be detailed and available for all to view.
"The public has lost trust in many of our politicians and this whole sordid affair will not have helped.
"Parliament must do what is right. Publish all MPs' expenses, in detail, for the last four years."