Senate Majority Leader Harry Reid (D-Nev.) has indefinitely postponed next week's vote on the controversial Protect IP Act "in light of recent events," he announced on Friday.
The move is a resounding victory for online activists, who staged an unprecedented protest against the anti-piracy measure on Wednesday.
Reid said he is "optimistic" the Senate can reach a compromise on the anti-piracy legislation in the coming weeks.
Just minutes after Reid's announcement, House Judiciary Committee Chairman Lamar Smith (R-Texas) said he would shelve the House's version of the legislation, the Stop Online Piracy Act (SOPA).
The measures, which seemed set to sail through Congress just a few weeks ago, now appear dead.
“I understand and respect Majority Leader Reid’s decision," Sen. Patrick Leahy (D-Vt.), the bill's sponsor, said in a statement. "But the day will come when the Senators who forced this move will look back and realize they made a knee-jerk reaction to a monumental problem."
SOPA and Protect IP had broad bipartisan support until Wednesday's Web protests unleashed a wave of voter anger.
Google, the most visited site in the world, plastered a black censorship bar over its logo, and Wikipedia blacked out its English-version site.
More than 7 million people signed Google's petition opposing the legislation.
GOP Sens. Orrin Hatch (Utah), Marco Rubio (Fla.), Roy Blunt (Mo.), John Boozman (Ark.) and Kelly Ayotte (N.H.) had signed on as co-sponsors of the Protect IP Act, but by Thursday, all of them had switched their position in the face of the public outcry.
On Thursday evening, Senate Minority Leader Mitch McConnell (R-Ky.) called on Reid to postpone next week's vote.
He said Reid made the "right decision" to delay the "flawed legislation."
McConnell's opposition made it unlikely that the bill would have been able to receive the 60 votes needed to cut off debate and proceed to a final vote.
All four GOP presidential candidates denounced the legislation in Thursday night's debate.
Mitt Romney called the measure "far too expansive," and warned it "would have a depressing impact on one of the fastest growing industries."
The White House released a statement on Saturday expressing concerns with the legislation, but administration officials said they believe law enforcement should have new tools to crackdown on online copyright infringement.
SOPA and Protect IP are designed to go after foreign websites that offer illegal copies of movies, music and TV shows. The bills would empower the Justice Department and copyright holders to demand that search engines delete links to foreign sites deemed to be “dedicated” to copyright infringement. Ad networks and payment processors would be prohibited from doing business with the sites.
Movie studios, record labels and business groups say the legislation would cut down on illegal file sharing, which is hurting companies and eliminating jobs.
But Web companies warn the bills would stifle innovation and censor free speech. They say the legislation would impose an unreasonable burden on websites to police user-generated content and could lead to legitimate websites being shut down.
—This post was last updated at 10:48 a.m.