A price increase had been due to come into effect on April 1, just days before India starts voting in an election that starts on April 7 and will end on May 12.
The Election Commission gave no reason for its decision late on Monday.
But India's Supreme Court on Tuesday resumed a hearing on two petitions to strike down the cabinet's June 2013 approval of a doubling in the gas price on grounds that it favoured a corporate house and was against the interests of the nation.
The government told the court on Tuesday that it would comply with the Commission's request.
Arvind Kejriwal, the head of India's new anti-corruption Aam Aadmi Party (AAP), which briefly controlled the state government in New Delhi, last month called for a criminal investigation into government officials and Reliance Industries Chairman Mukesh Ambani over the matter. Kejriwal had also called for the Election Commission to stall the price rise.
Reliance Industries is India's second most valuable company, and Ambani is its richest man.
The cabinet last year approved a near-doubling of gas prices from the current $4.20 per million British thermal units to spur investment in exploration for gas.
Following the Election Commission's action, shares in Reliance fell as much as 3.8 percent to 872.50 rupees, on a day when the Mumbai share markets were trading broadly flat. ONGC was also down 3.8 percent and state-run Oil India Ltd was trading down 2.5 percent.
"It sends a very bad signal to the outside world. In this country, due to elections even the commercial decisions can be postponed," said Deven Choksey, managing director at Mumbai brokerage K.R. Choksey Securities.
Many brokerages had upgraded earnings estimates for Reliance and ONGC after the cabinet approved the price hike last year.
"Thank you Election Commission for saving the people of India from huge price rise that would have happened if gas prices had increased from 1 Apr," Kejriwal tweeted after the commission announced it had called for a delay.
Reliance says Kejriwal's allegation that it created an artificial gas shortage to "blackmail" the government into raising prices is baseless. It has long maintained that geological complexities have pushed production lower and costs up, warranting an increase in prices in order to boost investment that will lead to higher output.
"A political party has written to the Election Commission (EC) to keep on hold a bona fide decision of the Union Cabinet on gas pricing. The party has a history of ill-informed diatribe," Reliance said in a statement issued on Sunday.
The company declined to comment after the Election Commission announced its decision late Monday.
HIGH DEMAND, LOW PRICE
Analysts noted that the cabinet approval was granted long before the election dates were announced, and some said the Commission's intervention could further undermine sentiment towards an energy sector that has struggled to attract investment.
The election commission can ask the government to put on hold any decision that comes into effect after announcement of the poll schedule if the move is seen influencing voters or benefitting any particular political party, but it did not explain its reasoning in this case.
In a letter to the petroleum ministry's secretary, the commission said it had decided the proposed price increase could be deferred, without elaborating.
In its statement on Sunday, Reliance said the government's decision to implement the new price from April 1 was part of a "contractual obligation", as current gas prices are valid until March 31.
Demand for gas in India far outstrips consumption and domestic supply, but the government has kept prices below global market levels for producers of fertilizer and electricity, which has deterred investment in domestic exploration and production.
India, the world's fourth-largest energy consumer, has few energy resources other than coal, which meets 56 percent of its energy needs. Oil, mostly imported, accounts for 26 percent.
Gas output from wells operated by Reliance and its partner BP off India's east coast, has fallen sharply since 2010. The companies say the decline in due to the geological complexity of the KG D6 block.