In a blog post on the Xbox website, the computer giant said the announced Internet connectivity requirements would be dropped before the console ships this fall.
Microsoft had been taking a beating from gamers over policies that restrict sharing of Xbox One games among friends and require online authentification once every 24 hours.
"Since unveiling our plans for Xbox One, my team and I have heard directly from many of you, read your comments and listened to your feedback," said Microsoft Interactive Entertainment Business President Don Mattrick, in a blog post titled "Your Feedback Matters" Wednesday.
The blog post said any disc-based or downloadable game could be played completely offline after the completion a one-time online system setup. And gamers would be able to continue to share, resell and lend disc-based games, a continuation of current policy.
"While we believe that the majority of people will play games online and access the cloud for both games and entertainment, we will give consumers the choice of both physical and digital content," Mattrick wrote. "We have listened and we have heard loud and clear from your feedback that you want the best of both worlds."