The government announced plans last year requiring all people aged 18 and older to get vaccinated against COVID-19, the first country in Europe to do so.
The law took effect in February but parliamentarians suspended the mandate before police were due to enforce it in mid-March.
Health Minister Johannes Rauch said the rise of new virus variants had changed citizens' perception of the effectiveness and necessity of a vaccination, even among those willing to get the shot.
This could deter them from voluntarily getting booster shots that will help curb the outbreak in the autumn, he said.
"No one is getting vaccinated because of the compulsory vaccination (law)," Rauch explained.
On Wednesday, just 140 people across the country received their first coronavirus jab.
People had to be convinced of the need for a vaccination, Rauch said.
 "And we can only achieve this when it is on a voluntary basis."
"The vaccine mandate hinders some people who are generally willing to get the shot from taking the booster, the idea being: I'm not going to be told what to do," Rauch said.
He said current hardships such as inflation and high energy prices, and fears surrounding the war in Ukraine, had contributed to tensions in society.
"We need every millimetre of solidarity and cohesion to cope with the coming months and years," Rauch said.
"And the debate surrounding compulsory vaccination and the hardening of positions over this question tore open rifts and did away with that solidarity."
About 62.4 per cent of the population in Austria is double vaccinated.
with reporting from DPA
