Sky said it would consider reactivating the Picnic project, which was unveiled last year, once there was more "certainty" over its proposal, according to the FT.
The broadcaster said in a statement to the FT: "We continue to believe strongly in Picnic. It will be good for consumers and a good opportunity for Sky.
"While our launch plans are already well advanced, there is no definitive conclusion in sight to the Ofcom process. Consequently, we intend to wind down preparations by redeploying as many of the team as possible to other parts of Sky.
"We will decide whether to reactivate the project when we have more certainty over the Picnic TV proposal."
Picnic, which was the brand name for Sky's new offering, would have replaced Sky Three, Sky News and Sky Sports News on Freeview with Sky's most popular channels, including Sky Sports 1, Sky Movies and Sky One, as well as a children's and a factual channel.
To access the service, customers would have needed to use a new generation of digital box and pay a subscription.
The service was expected to launch next year following authorisation by the broadcasting regulator.
However, Ofcom is combining its inquiry into Picnic with an investigation of the pay-TV market and an outcome may now not be delivered until next year.
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