The opposition's proposal fuelled voters' concerns that ending pandemic-era work-from-home policies for government departments would encourage the private sector to follow suit, if the coalition won the May 3 election.
And with one month to go until Australians go to the polls, Mr Dutton buried the plan.
"We have the extraordinary position of Peter Dutton who - having defended his attack on working from home - is now pretending that the program won't succeed," Prime Minister Anthony Albanese told reporters in Melbourne on Monday.
"He's pretending that the policies he announced ... just don't exist and that everyone will just forget about all that."
Mr Dutton also apologised for the work-from-home ban as he announced the reversal.
"We got it wrong, we've apologised for it, we support flexible workplace arrangements," he told reporters in Adelaide.
The work-from-home policy risked turning off female voters and Mr Albanese had used this to paint Labor as the party for workers.
Labor contends that flexible work arrangements particularly benefit women who can take on more work while being able to look after children at home.
The share of women working full-time has increased from 54 per cent to 58 per cent as work-from-home arrangements have become more common since COVID-19, Australian Bureau of Statistics data shows.Â
This may also be, in part, due to increased public spending in traditionally female-dominated industries like health and child care, but studies have shown that working from home has reduced the gender pay gap.
Labor analysis shows that families where women are forced to drop work as a result of cuts to flexibility arrangements could lose as much as $740 a week in income.
"(Mr Dutton) wants to rip the heart out of fairness in our industrial relations system, doesn't matter whether it's work from home, same job same pay, casualisation, gender equity on the workforce," the prime minister said.
The coalition has also backed off on plans to fire public servants, with finance spokeswoman Jane Hume saying the sector would be whittled down by 41,000 over five years through a hiring freeze and natural attrition, not forced redundancies.
Mr Dutton now claims this was "always the plan" and accused Labor of "contorting that into something else".
"For us, the priority is how we help families," he said.
"Australians will be asking: who do they trust to manage the economy?"
However, the backflips have raised questions over how the coalition plans to find savings - if it wins government on May 3 - after saying the cuts to the public service would save $7 billion.
As Mr Albanese and Mr Dutton enter the second week of the election campaigns, the opposition leader is hoping to turn a new leaf and shift momentum.
The latest Newspoll shows Labor is leading the coalition 52 per cent to 48 per cent on a two-party-preferred basis, after the government extended its lead.
The opposition leader will be in Adelaide courting voters, while Mr Albanese has spruiked transport promises in Melbourne.
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