Instead, the department said it has asked the local government to consider moving the animals - which have been blamed for ruining the habitat of rare lizards and insects - to another site.
A report released earlier this month recommended the immediate slaughter of the animals to protect lowland native grasslands and threatened species, and said relocating them would be inhumane.
Scientists say eastern gray kangaroos are abundant and are destroying the native grassland of threatened species like the grassland earless dragon and the striped legless lizard.
But the plan triggered international protests by animal rights activists - including celebrity rock stars Paul McCartney and Chrissie Hynde - and split Australians over the merits of killing their beloved national symbol to protect the creatures that share their grassy habitat.
More than 60 species of kangaroo exist throughout Australia, and while a few species are endangered, others have thrived on Outback land that has been cultivated for grazing. They now exist in huge groups, known as mobs.
Federal environment protection laws allow wild kangaroos to be hunted, and they are killed by licensed hunters under a quota system. The meat is used for human consumption and pet food, and the pelts for soft toys and other items.
