The Online Safety Bill has been postponed until a new prime minister is installed this Autumn.
The bill aims to allow the Office of Communications (Ofcom) to regulate online platforms, with the introduction of fines for digital companies if they do not follow the overhauled online advertising regulations.
Ofcom would have the power to fine companies failing to comply with the laws up to 10% of their annual global turnover, force them to improve their practices, and block non-compliant sites.
Company executives who fail to cooperate with Ofcom’s information requests could also face jail time.
As part of the bill, the government had vowed to crack down on paid-for internet scam advertisements.
Ofcom will set out further details on what platforms must do in codes of practice. That may include measures such as checking the identity of those who wish to publish advertisements.
It should ensure that financial promotions are only made by firms authorised by the Financial Conduct Authority.
As it was in report stage, MPs were meant to discuss potential amendments next week, before forwarding the bill to the house of lords.
Reacting to the news, B&CE director of policy Phil Brown said: “The delaying of the Online Safety Bill is disappointing for those fighting against pension fraud, which is arguably the cruellest of all financial crimes.
“Our research suggests that more than £14bn may have already been stolen from pension savers in the UK, but, sadly, ruthless criminals will only want more and with £2.5trn of pension savings at risk, there is plenty for them to target.
“The bill will offer protections against online fraud, meaning it’s vital that any delay is minimal if the government is serious about protecting people from financial harms.”
Figures from consumer data provider Rightly shows that 48% of Brits have either fallen victim to a scam or come close to it.
A large proportion of the population is savvy when it comes to basic measures such as not replying to emails that look suspicious, being wary of pop-ups, and using virus protection.
Yet, Rightly stressed other less well-publicised risks are still taken by many.
Some MPs have criticised the bill as a potential infringement of freedom of speech.
Conservative backbencher David Davis said: “We all want the internet to be safe. Right now, there are too many dangers online, from videos propagating terror to posts promoting self-harm and suicide.
“But the bill’s well-intentioned attempts to address these very real risks threatens being the biggest accidental curtailment of free speech in modern history.”
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