The country's conservative Liberal government had planned to hold a national plebiscite, similar to a referendum, on whether or not to allow gay couples to marry in February 2017.
But the opposition Labor Party said the government should simply make same sex marriage legal without a national vote, avoiding a vicious debate over LGBT rights and savings millions of dollars in election funding.
Australia is one of the last Western countries
without legal same sex marriage, which has already been introduced in the United States, New Zealand, France, Canada and the United Kingdom.
About 57% of Australians support same sex marriage, according to a recent Essential polling survey
"This will be the 22nd marriage equality bill in Australia and we still haven't got (LGBT) marriage and at a certain point we have to think, what are we doing wrong here?" Australian Marriage Equality director Tiernan Brady told CNN.
'High likelihood' same sex marriage out
Australian Prime Minister Malcolm Turnbull brought the legislation before Parliament for the first time on Wednesday after months of negotiation.
He set the date of the same sex marriage vote for February 11
, and will controversially give A$7.5 million (US$5.6 million) to both the campaigns in favor and against LGBT rights.
"We are committed to people supporting each other. And that is why I support same sex marriage," Turnbull said
while introducing the legislation.
But Labor party leader Bill Shorten said on Wednesday he was "gravely concerned"
about the plebiscite, giving his strongest hint yet his party would block it.
Australian National University School of Politics professor John Warhurst said it was now very likely the national vote would not happen, and no other moves on gay marriage may be made for years.
"I think there's a high likelihood that the issue will not be proceeded with for at least two and a half years, and it's not clear even beyond the next election (2019) exactly what the dynamic will be," he said.
Warhurst said the plebiscite had originally been the policy of former Prime Minister Tony Abbott, as a way to defer the introduction of same sex marriage, and when he became leader Turnbull had been forced to keep it by his party's conservatives.
Both Turnbull and Shorten are publicly in favor of marriage equality.
'(It) will inflict terrible damage'
A major criticism of the Australian government's plebiscite plan has been it would inflict several months of aggressively negative campaigning on LGBT people.
"No matter how positive or inclusive (our campaign) is there are still the voices on the 'no' side who will inflict terrible damage with their words," Brady said.
"The idea that any group of people would have their relationships measured and discussed and have people talk about whether they have a value at all to society -- there's no way anyone could conceive that wouldn't be a difficult journey."
Brady said even if the plebiscite failed, LGBT rights group would not be content to wait years for marriage equality and would attempt to pass it in this parliament.