Prime Minister Scott Morrison has abandoned a liberal commitment to raise the retirement age to 70.
The Liberal Party has been trying to raise the retirement age for 67 years, but Mr. Morrison announced on Wednesday that he had abandoned it.
"Next week, the cabinet will ratify the decision to reverse the withdrawal of the pension, the retirement age, to 70. It will remain at 67," he told Nine Network.
"I do not think we need that measure anymore when it comes to raising the retirement age, and that's one of the things that I'll change very quickly."
But Labor leader Bill Shorten believes Mr. Morrison will put him back on the table if the coalition gains control of the Senate in the next federal election, after backing the increases for three years as Liberal treasurer.
"Now he wants to quit because he's worried about losing his day job," Shorten told reporters in Townsville on Wednesday.
"The problem with liberals is that you can not trust them, when they are on the defensive, they will say what you want to hear."
Deputy Prime Minister and National Leaders, Michael McCormack, described the radical change as a "sensible and pragmatic" measure, particularly for manual workers in regional areas.
"I think if you're a tradie, a bricklayer or a shearer in rural and regional Australia, you do not want someone to file a lawsuit in Canberra telling you that you should work until you're 70," McCormack told Sky. News.
"It's hard and exhausting work that many people do, and I think they're told they're going to have to work until they're 70, I think, probably they've gone too far."
Council on the Aging said the 70-year target had caused anxiety for older people trying to transition to retirement.
"They were the people who wanted to work, or who needed to work, but they knew it would be difficult to get a job that caused them anxiety," he told AAP.
The retirement age plan was first announced by the Abbott government under then Treasurer Joe Hockey in 2014, but it was never legislated.
According to the original proposal, the age required for the pension would have increased by six months every two years until reaching 70 years by 2035.
It was expected to save the budget some $ 3.6 billion in four years.
Cabinet Minister David Littleproud said he understood that the budgetary impact would be minimal or nil.
"There is a solidarity of the cabinet around that decision," he told ABC radio.
The Association of Combined Retirees and Superannutrients said that many of the 100,000 people over 50 who are in the Newstart subsidy now will not have to wait three additional years for the old-age pension.