Conservative deputies decided at a meeting that no draft legislation on the process, which is the subject of fierce debate in Germany, would be presented before September 22nd general elections, participants said.
Hydraulic fracturing or fracking, where water, sand and chemicals are blasted into rock cracks to drive out gas and oil, remains controversial because of the risk to ground water reservoirs. France in 2011 banned the practice, which has brought a cheap-energy boom to the United States.
Merkel's conservatives and coalition partners, the pro-business Free Democrats, had agreed recently on a bill that would have permitted fracking in principle but under very tight conditions.
Under a draft proposal by the economy and environment ministries in late February, fracking would be banned near water reserves and mineral springs. The draft also called for rigorous environmental impact studies at each proposed site.
But members of the Bavarian sister party of Merkel's Christian Democrats, among others, raised concerns at Tuesday's meeting, said participants who declined to be named.
They also quoted Environment Minister Peter Altmaier as saying he did not anticipate that fracking would be used in Germany in the foreseeable future.
On Friday a consultative body on the environment that advises the German government said that, based on current knowledge, fracking would be of no interest for Germany in cutting its energy costs.