The measures, which included tougher, permanent customs controls on Denmark's borders with Germany and Sweden, had been criticized as violating Europe's Schengen open borders agreement. They were slated to be introduced gradually over the next three years.
“This is a decision for the freedom of the European people,” said Guido Westerwelle, Germany's foreign minister, shortly after the announcement on Monday.
Denmark's new left-leaning prime minister, Helle Thorning-Schmidt said on Monday the decision to reintroduce the borders had been a mistake, as she pledged to liberalize Denmark's policies toward foreigners.
“We want a Denmark that stands as one,” she told reporters at a Monday press conference.
The Schengen Agreement, which covers most of the European Union and several non-EU members, freed travellers from having to stop for passport checks between the participating 25 member countries.
In some cases, countries can reintroduce passport checks, but only temporarily.
Although Denmark's previous centre-right government had said the new customs measures did not violate Schengen because official passport controls were not being introduced, the European Union and neighbouring countries argued that they would have violated the spirit of the agreement.