A Ministry of Industry and Information Technology official told AP that use of the "Green Dam Youth Escort" software is "not compulsory."
The government had previously announced that the filtering software had to be packaged with all computers sold in China beginning July 1.
The original announcement sparked a firestorm of protest from security researchers, Chinese internet users and global PC manufacturers. Researchers from the University of Michigan have also warned that serious security vulnerabilities are present in the code.
"We examined the Green Dam software and found that it contains serious security vulnerabilities due to programming errors," said the report summary. "We found these problems with less than 12 hours of testing, and we believe they may be only the tip of the iceberg."
China is one of the keenest internet censors in the world, with a long history in blocking politically-unwanted content. However, the task is becoming harder as China's internet population rockets – it is now the world's largest with 298 million users.