The proposed legislation would have provided broad powers to fine technology companies up to five per cent of their annual turnover if they breached new online safety obligations.
Communications Minister Michelle Rowland said she had abandoned the bill after facing serious opposition in the country's Senate.
"Based on public statements and engagements with senators, it is clear there is no way this proposal will be passed by the Senate," she said in a statement.
The proposed bill has drawn the ire of tech baron Elon Musk, who in September likened the Australian government to "fascists".
Australia has been at the forefront of global efforts to regulate tech giants.
The government will soon introduce a nationwide ban on the use of social media by children under 16.
Under separate laws tabled in the Australian parliament on Thursday, social media companies could be fined more than $30 million if they fail to keep children off their platforms. | BGNES
