Though it backs same-sex marriage, the left-wing opposition Labor party formally announced Tuesday it would not support the government's planned national vote.
They say a public vote is unnecessary, too costly and would trigger a divisive public debate which could traumatize young gay and lesbian Australians.
Instead, Labor, and other opposition parties, want same-sex marriage to be passed by Parliament immediately -- something which government conservatives are dead set against.
All of this leaves Australia's gay community hanging. Without Labor's support, the government won't have enough votes in the Australian senate to approve the national vote.
The government wanted to hold the national plebiscite
, similar to a referendum, next February, at a cost of about US$120 million.
Same-sex unions off for years?
Prime Minister Malcolm Turnbull has said if the plebiscite isn't held, marriage equality could be off the agenda until 2019, which is when the next general elections will be held.
However, one of Australia's most prominent gay politicians supports rejecting the plebiscite and is prepared to wait for gay marriage in Australia.
"No other human rights issue is put to a national vote in Australia," Andrew Barr, Australian Capital Territory Chief Minister, told CNN.
"In Australia we can declare war, we can send our troops overseas into battle without even consulting our parliament ... and yet for something as straightforward as including everyone in marriage, our current government believes there needs to be a vote of every Australian," the Labor politician said.
Numerous Western countries, including New Zealand, Canada, the United Kingdom and the United States, have legalized same-sex marriage in recent years.
Both party leaders, most Australians, support gay marriage
A majority of Australians support same-sex marriage, according to recent Essential opinion polls
So do, both major party leaders in Australia -- Labor leader Bill Shorten and Malcolm Turnbull, who is the first Australian Prime Minister to support gay marriage while in power.
So why has it become such a big issue?
Conservatives in Turnbull's party want him to keep the plebiscite which was originally devised by former Prime Minister Tony Abbott in 2015, rather than passing same-sex marriage in a Parliamentary vote.
They believe the public should have a say on such a big social issue.
John Warhurst, a professor at Australian National University's School of Politics, says conservatives believe a public vote is their best hope to defeat -- or at least stall -- gay marriage in the country.
"(In 2015) it looked as though the supporters of same-sex marriage almost had a majority in the Parliament, so you can only be skeptical (the plebiscite) was a method to stall the process and try to ensure same-sex marriage was defeated in Australia," he told CNN.
'Time for rising above party politics'
Lyle Shelton, the managing director of the Australian Christian Lobby, told CNN he was "disappointed" the plebiscite was likely to be voted down.
"The Australian Labor Party, the Greens and some of the crossbenchers have worked as political elites to deny the people a say on what is the biggest and most radical social change in a generation," he said, adding he thought the issue would now be gridlocked for years.
High-profile celebrities like singer Kylie Minogue and Margot Robbie are campaigning in favor of gay marriage. Minogue and her fiance won't walk down the aisle
until Australia legislates for marriage equality.
Australian Marriage Equality director Tiernan Brady said the rejection of the plebiscite was the will of the majority of gay and lesbian Australians.
"(But) for the first time in Australia we have a marriage equality bill from a government, so that's good news ... This is a time for rising above party politics," he told CNN.
Same-sex marriage has been illegal in Australia since 2004, when former conservative Prime Minister John Howard changed Australia's Marriage Act
to allow only heterosexual couples to marry.