The Abbott government has bowed out of a battle over plans to change racial discrimination laws.
Prime Minister Tony Abbott dropped plans to repeal section 18C of the Racial Discrimination Act, saying the debate had complicated relations with ethnic groups.
The shelving of the plan was announced as Mr Abbott talked of new measures to combat terrorism.
"I want to work with the communities of our country as `Team Australia' here," Mr Abbott said of the need for a co-ordinated effort to tackle terrorism.
He said consultation with all groups, including the Muslim community, must not be jeopardised by the changes and they were therefore taken off the table.
The repeal of 18C, an Abbott government election commitment, has been widely criticised as a watering down of protections against racism.
Section 18C of the act makes it unlawful to offend, insult, humiliate or intimidate another person or a group of people because of race, colour or national or ethnic origin.
More than 5500 submissions flooded into the Attorney-General's office following the release of draft laws in March.
Only a handful have been released but the majority reportedly opposed the changes.
An April poll published by Fairfax Media showed 88 per cent of respondents believed it should be illegal to offend, insult or humiliate someone based on their race.
Coalition backbenchers joined the opposition, and Labor leader Bill Shorten says that's why the "deeply unpopular" changes have been ditched.
"What is clear ... is that the Attorney-General has been rolled by his cabinet," Mr Shorten told reporters.
The government had been humiliated and embarrassed by the proposal, he said, which was flagged one year ago.
"This has been a dreadful waste of national energy," the opposition leader said.
The Australian Greens have repeatedly questioned the government's motive behind the changes, after political commentator Andrew Bolt fell foul to 18C for a column questioning the motives of lighter-skinned Aboriginal people.
Mr Bolt was one of the first to comment on the government's announcement on Tuesday, blaming the move on lobby groups who "hate free speech".
"I suspect the country will be poorer for this," he said.
Attorney-General George Brandis has previously said Australians have a "right to be bigots" when defending his changes.
