The government has decided to abandon plans aimed at easing Swiss weapons exports following widespread public criticism.
"There is no longer sufficient political and parliamentary support for the reform," the cabinet spokesman told a news conference on Wednesday.
He added that the government was also concerned that insisting on eased rules for the export of war materiel would have negative repercussions.
In June, the government announced plans to ease export restrictions, allowing Swiss arms companies to sell weapons to countries as long as the arms are not used in an internal civil war.
The announcement triggered a storm of protest. A cross-party group said it would launch a people’s initiative to stop exports of war materiel, and moves are underway in parliament to have a say on such sales.
The International Committee of the Red Cross (ICRC) also appealed to Swiss politicians not to ease the restrictions.
However, representatives of the Swiss armament industry came out in favour.
Wednesday's decision comes shortly after Economics Ministers Johann Schneider-Ammann said in an an interview with the newspapers, Tribune de Genève and the 24 Heures, that his ministry agreed it was "neither realistic nor intelligent to push ahead with liberalising the [weapons export] procedure at this stage."