The federal government says it remains committed to its emissions trading scheme (ETS), refusing to confirm reports it has been shelved until 2013.
The government planned to start its carbon pollution reduction scheme (CPRS) by July 2011, but has pushed it back to 2013 at the earliest, after a decision by cabinet's priorities and budget committee, The Sydney Morning Herald reported.
Climate Change Minister Penny Wong would not confirm the report.
"The blocking of the CPRS legislation by the opposition has caused delays and created uncertainties which will of course affect the budget treatment of the CPRS," a spokeswoman for the minister told AAP.
"The government remains committed to the CPRS as the best and lowest cost way to reduce carbon pollution."
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The move would see the government take its ETS legislation off the table until after an election, likely this year.
It would also mean Labor would not use its latest legislation as a double-dissolution trigger, nor its original bills twice rejected by the upper house last year.
The Senate was expected to vote on the legislation when parliament resumes sitting in May.
Opposition climate change spokesman Greg Hunt said the decision would save the government $2.5 billion, and was contrary to Prime Minister Kevin Rudd's past claim that climate change was "the greatest moral challenge of our generation".
"Now it is an inconvenience for him," Mr Hunt told ABC Radio.
Opposition legal affairs spokesman George Brandis told Sky News the government still wanted to impose a "great, big new tax on everything" but didn't want it to become an election issue.
"They are policy cowards, this has never been about the greatest moral challenge of our time ... that was rhetoric," he said.
"When they discovered that it wasn't an electoral winner for them, they are running away from it at a million miles an hour."
Small Business Minister Craig Emerson refused to confirm the report, saying it was the coalition that was thwarting efforts to address climate change.
"We will take the climate change issues to the next election and the people will have another opportunity to determine their position," he told Sky News.
"I know what position they will adopt, and that is that their must be decisive action on climate change."
