Changes to the Australian 457 visas temporary skilled migrant scheme were dropped from parliament's programme on the final sitting day.
Legislation implementing tougher measures almost made it through the lower house of parliament on Wednesday, before the Labor caucus voted out Julia Gillard as ALP leader.
AAP reports the bill is not listed for consideration on Thursday, the last scheduled sitting day for the House of Representatives before the general election.
Earlier, the federal government secured the vote of an Independent MP by making changes to the labour market testing rules.
The Coalition said the changes make the bill worse and voted against the amendments.
A crackdown on 457 visas was announced by former Prime Minister Julia Gillard in western Sydney in March.
She said the visa programme was "out of control" and stated that jobs should be given to Australians first.
Immigration Minister Brendan O'Connor claimed there had been more than 10,000 instances of rorting by employers - a claim he later said was an estimate.
The crackdown was criticised by business as an unwarranted measure and by the Greens and Opposition as having tinges of xenophobia.
The ABC reports the proposed new laws would force employers to do local labour market testing to prove they cannot find an Australian citizen to do the job before sponsoring an overseas worker on a 457 visa.
Employers would also have to spend a percentage of their total payroll on training local staff and 457 visa holders.
Fair Work inspectors will be empowered to investigate potential breaches of the system.
The government said the law will safeguard Australian jobs and ensure overseas workers are not exploited.