Government coalition partners have successfully stopped an overhaul of planning laws.
The Maori Party and UnitedFuture MP Peter Dunne teamed up to oppose reforms of the Resource Management Act (RMA), saying it placed economic growth ahead of environmental protection.
National needed either party's vote to get the legislation over the line.
This afternoon, Prime Minister John Key confirmed negotiations had stalled and he had "parked up" the reforms until after the general election in September.
"I think it is very unlikely we will introduce the RMA bill before the election," he said.
"I think we will campaign on what we want to do and see what the makeup [of Parliament] looks like, whether we are the Government after the election. I've decided to park it up."
The RMA reform is a key plank of the Government's growth programme.
Environment Minister Amy Adams spearheaded the latest changes, which are the third phase of the overhaul of the 20-year-old legislation.
National wants to cut the cost of building and argues the present consenting processes take too long and are costly, slowing developments. Adams wanted to shake up part two of the RMA, which puts in place environmental safeguards.
Conservation lobby group Forest & Bird said failure to get support was a signal the reforms "went too far", and the Government's failure to get support for its reforms were a signal those reforms went too far.
"Given the Government can't get the numbers it needs, it should give up and leave the fundamentals of the law alone," advocacy manager Kevin Hackwell said.
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