The bill provided for establishing a Judicial Appointments Commission (JAC) to make recommendations to the president on appointment and transfer of judges in the higher judiciary.
Seeking permission to withdraw the bill, Law Minister Ravi Shankar Prasad said it was a bill that the standing committee had disapproved.
"The reason as to why the bill is being withdrawn is in current circumstances. The standing committee said the provisions shall be made in the constitution itself," Prasad said.
He added that a constitutional amendment bill and a fresh judicial commission bill will be brought by the government.
While the Congress objected to the withdrawal most parties supported the government, calling it a part of streamlining judicial appointments.
The house later agreed to withdraw the bill.