Repeated attempts by the federal government to get the $1.1 billion Access Card legislation through parliament has stalled with future plans for the smart card now on hold until at least 2008.
Human Services Minister Chris Ellison admitted the government's original timetable, which involved getting the legislation through both houses of parliament by June 2007, was far too ambitious.
The card has been dogged by privacy and security concerns since its inception with Ellison confirming the draft legislation will not return to parliament this year.
"We won't be able to have legislation for the next session because we've had more than 40 submissions and there are ongoing talks planned with the states and territories," he said adding that public support is essential for the project to succeed.
Under the original timeline Access Card registrations were supposed to begin next year with the smart card fully operational by 2010.
Aimed at streamlining health and welfare benefits, it will replace 17 cards including the Medicare card.
However, forced consultation on the project by the Opposition, Democrats and privacy groups has steamrolled the government's timeline and put the future of the card in doubt.
With an election looming, all bets are off, particularly as the Labor Party has promised to dump the card upon winning the election.
Democrat Senator and privacy spokesperson Senator Natasha Stott Despoja said she is relieved "this intrusive proposal" is off the agenda until at least after the election.
However, Despoja said the fight isn't over and the Democrats will continue to oppose the card until it is dropped for good.
"It seems the government expected to rush this proposal through parliament with little consultation or debate - as it has done with so many important bills since it won control of the Senate two years ago - but the public, and Senators from all parties who took part in the Senate inquiry earlier this year, refused to let this happen," she said.
When details of the card were made public in 2006, the executive director of the NSW's Cyberspace Law and Policy Centre, David Vaile, said the government's timeline was impossible.
Vaile said it could cost $5 billion and take up to five years to implement, accusing the government of being unrealistic.
IT projects, he said, tend to be "grossly underestimated" in terms of cost and timing and scope creep is likely.