French President Jacques Chirac will sign a youth employment law (CPE) which has sparked mass protests, he has declared.
But in an address to the nation, Mr Chirac promised to modify two of the law's most controversial clauses.
He pledged to shorten from two years to one the period in which youths under 26 could be fired - and said employers would need a reason for the dismissal.
Trade unions said Mr Chirac's plan was unacceptable, and crowds gathered in Paris booed and jeered his speech.
Student leaders and unions have vowed to press ahead with a strike called for next week.
The law, known as the CPE, makes it easier for employers to hire and fire people under the age of 26.
The president said he had decided to sign the law because it had been voted through parliament and opened new employment opportunities.
"It is time to defuse the situation," he said.
"We don't want to negotiate. We don't want it at all," Bruno Julliard, head of the largest students' union, told French TV.
"There will be more demonstrations," leader Francois Hollande said.
Students, unions and left-wing political parties have staged a three-week campaign of strikes and demonstrations against the CPE, with some protests turning violent.