Prime Minister Scott Morrison has abandoned a commitment to raise the retirement age to 70.
The Liberal Party has for years been trying to raise the pension age from 67, but Mr Morrison announced on Wednesday he would no longer pursue the change.
"Next week, cabinet will be ratifying a decision to reverse taking the pension - the retirement age - to 70. It will remain at 67," he told the Nine Network.
"I don't think we need that measure any longer when it comes to raising the pension age, and that's one of the things I'll be changing pretty quickly.
"I've been talking to my colleagues about it, we'll ratify it next week. The pension age going to 70 is gone."
The so-called "zombie measure" was first announced by the Abbott government but has never been legislated.
Under the 2014 proposal, the qualifying age for the age pension would rise from 67 to 70 beginning in 2025.
The age would be increased by six months every two years until reaching 70 in 2035.
It was expected to save about $3.6 billion over four years.
Cabinet minister David Littleproud said he and his colleagues had been consulted on the policy about-face and were fully supportive of the move.
"There's cabinet solidarity around that decision," Mr Littleproud told ABC radio.
"From our understanding there will be minimal to no impact (on the budget)."
Mr Littleproud said the prime minister had been considering the change during his former role as treasurer, denying it was policy on the run.
The Combined Pensioners and Superannuants Association said the move made sense and means that many of the 100,000 people over 50 who are on the Newstart allowance won't have to wait an extra three years for the age pension.
"CPSA is very pleased that sustained campaigning against the pension-age-to-70 policy has paid off," the not-for-profit group's Paul Versteege said in a statement on Wednesday.
