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The move comes amid concern from Cr David Benson-Pope public consultation over the tougher stance had been ''seriously compromised''.
The concern was raised at Monday's full council meeting, when councillors had been due to adopt a revised skateboarding bylaw updating an existing ban from 2005.
The revised bylaw would add Albion Lane and George St, between Frederick and Albany Sts, to the prohibited zone, which already covers much of the central city, including the Octagon and the Esplanade at St Clair.
It would also have granted council officers the power to confiscate skateboards from those who continued to flout the rules.
The old bylaw allowed for fines of up to $100, but could not be applied to those aged under 14, frustrating police and retailers who worried about the safety of elderly shoppers.
The new bylaw would grant the ''power to seize and impound'' skateboards, and force owners to pay $50 to have them released.
However, councillors at Monday's meeting decided not to sign off on the tougher new policy after Cr Benson-Pope said it had become clear the process to update the bylaw was ''seriously compromised''.
The council had sought, and received, public submissions on the change, but it had since become apparent some people had missed out on - or misunderstood - the consultation process, he said.
That included Dunedin photographer Derek Morrison, who told a recent council public forum some residents had been unaware the city's existing skateboarding ban covered St Clair.
Signs had been installed only recently and he had urged the council to rethink its approach, saying it risked damaging the area's beach culture.
Dunedin Mayor Dave Cull had also been approached directly by a delegation concerned by the changes, and, on Monday, councillors heard another plea from University of Otago professor of law Peter Skegg.
Prof Skegg, a St Clair resident, said he, too, had been unaware skateboarding was already prohibited at St Clair.
He urged councillors to grant an exemption to younger children skateboarding at St Clair, saying it offered a safer environment than the Thomas Burns St skate park.
As a result, councillors on Monday supported Cr Benson-Pope's recommendation not to approve the new bylaw, and to instead continue with the old bylaw while work to update it resumed.
The results would be presented to a later committee meeting, followed by fresh public consultation, councillors decided.
Cr Jinty MacTavish, an early opponent of the tougher stance, said she supported the move but remained wary of a ''one size fits all'' approach to skateboarding.
The council needed to think ''more broadly'' about skateboarding's place in the city, and sending the issue back to the committee would allow that to happen, she said.
''Part of the problem is we simply aren't catering for these modes of transport appropriately,'' she said.
Cr Kate Wilson agreed, saying the council's approach should follow in the footsteps of its more permissive attitude towards freedom camping.
That would mean more guidelines on how to skateboard ''in a good manner ... rather than prohibition'', she said.
However, Cr Lee Vandervis believed the revised bylaw already offered a ''restrained'' approach, after a costly process, and should be adopted.
''I'm at a slight loss to understand why it is that we are wanting to go back,'' he said.
Cr Benson-Pope said the public had made it clear the bylaw needed more work, particularly when it came to St Clair.