The proposal would have deferred sentencing for sexual assault of minors in cases where there was no physical force and where the victim and perpetrator were married.
The government said it would submit the proposal to a parliamentary committee for review.
The age of consent in Turkey is 18, although courts permit civil marriages from 16. Many younger people are married in Islamic ceremonies.
The government has argued for the need to redress “unfair treatment” of families where fathers were jailed for marrying girls under the age of 18 even if both parties and their parents consented.
The proposal by the ruling Justice and Development Party, rooted in Turkey’s Islamic movement, would have applied to cases that occurred between 2005 and 16 November this year.
The measure would have required men who were married to minors in Islamic ceremonies to formalise their union with civil marriages.
Opponents argued that the bill amounted to a pardon for statutory rape if the perpetrator was married to his victim, and would disrupt efforts to prevent child marriages and sexual assault on children. They maintained that it would, for example, legitimise the practice of men taking brides as young as 13 or 14.
Hours before the vote, prime minister Binali Yildirim said the government was pulling back the proposal and would ask an all-party commission on family affairs to review it.
His comments came after President Recep Tayyip Erdogan told the state-run Anadolu Agency a broad consensus on the issue should be sought.
“Due to a lack of full public consensus, our president’s call for a broad consensus and to allow opposition parties to develop their own proposals, we are taking this proposal to the commission,” Mr Yildirim said. “This problem will certainly be solved after being discussed in detail, with all parties’ views being taken into account.”
Hundreds of people gathered in front of the parliament building to protest against the measure burst into celebrations after the government decision.
“I am embarrassed that this issue is even being discussed,” said Perihan Koksal, one of the protesters. “A child can’t be a woman, can’t be a mother.”
Devlet Bahceli, the leader of the opposition nationalist party, called on the government to abandon the measure completely, and that submitting it to a review is not enough.
“Don’t suffocate Turkey any further with such meaningless and empty discussions,” Mr Bahceli said.
Opposition parties, rights groups and citizens had widely condemned the proposal since its initiation last week, issuing statements and staging demonstrations across cities nationwide.
United Nations agencies, including the children’s fund Unicef, issued a joint statement on Monday warning the proposal “would weaken the country’s ability to combat sexual abuse and child marriages”.
The government had insisted it was committed to fighting child marriages but said the measure was needed to help 3,800 families where under-age marriages had occurred according to customs.
“We cannot ignore this (problem),” Mr Yildirim said. “There are 3,800 cases and thousands of children. The children are paying the price of their parents’ mistakes.”
In 2005, the government scrapped loopholes that had allowed men to escape rape charges if they married the victim, as part of efforts to join the European Union.