Mr Bain has applied the High Court at Auckland for a judicial review of Ms Collins' decision to reject the report and recommendation of Canadian and former Supreme Court judge Ian Binnie.
Ms Collins had been preparing to take an options paper to today's cabinet meeting.
But after the application was made last week, she has delayed it.
"Cabinet has agreed to put Mr Bain's application on hold, as he has requested," she said.
"Mr Bain has filed judicial review proceedings which will lead to further delay."
Mr Bain was acquitted of the 1994 murders of his parents, two sisters and a brother after serving 13 years in prison.
He has applied for compensation for wrongful imprisonment.
Ms Collins pointed out again today that such payments are at the discretion of the cabinet and that Mr Bain's case falls outside the cabinet guidelines for approval.
