The proposed change on the presumption of bail for children will be split off from legislation when debate begins in the upper house on Thursday.
It will instead become part of a standalone youth justice bill early next year, which will also seek to raise the age of criminal responsibility from 10 to 12.
The delay means the test for bail will remain consistent for both children and adults but child-specific considerations for decision-makers are still being updated.
In September, a 14-year-old boy suffered life-altering injuries after he was allegedly abducted and run over by a group of teens on a crime spree as he walked home from school.
The alleged ringleader of the attack, a 14-year-old Frankston South boy, was charged with committing an indictable offence while on bail, as well as other crimes.
Attorney-General Jaclyn Symes said the Allan government had a responsibility to ensure the perception of safety is maintained.
"This is not a backflip, this is just a pause," she told reporters at parliament.
"The practical effects of this are minimal but I do not want a discussion about a youth crime crisis that doesn't exist.
"If we proceed with those reforms in this bill without the broader conversation about how we are responding to youth crime, we risk the perceptions of community safety diminishing."
Shadow attorney-general Michael O'Brien said the government had got the balance wrong.
"Under Labor's proposals, you would have seen a young person charged with serious offences - such as armed robbery, aggravated home invasions, or rape - facing the same test for bail as a young person who pinches a car or steals a packet of chewy from the service station," he said.
"It made no sense."
Victorian Greens justice spokesperson Katherine Copsey said it was a retrograde step by the Allan government, but the party would support the bill's passage.
"Youth crime offending is incredibly rare and we know that unnecessary contact with the prison system leads to terrible outcomes for kids," she said.
"It's an incredibly weak decision."
The bail reforms, designed to make it easier for low-level offenders to get bail and reduce the number of Victorians languishing on remand, are set to be enacted six months after passing parliament.
Another amendment will be moved by the government to mandate a statutory review of the bail laws' operation after two years.
The death of Indigenous woman Veronica Nelson in a prison cell in 2020 has been the catalyst for the relaxing of the laws after they were tightened in 2018 following the Bourke Street rampage.
Earlier this year, a coroner branded the 2018 reforms an unmitigated disaster.
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