Sky's news service will remain on the free-to-air service
Sky channels including Sky News, Sports News and Sky Three are to remain on Freeview as plans to replace them with a pay-TV service have been shelved.
Sky decided to drop the service, Picnic, after broadcasting watchdog Ofcom failed to give the scheme the go-ahead after an 18-month investigation.
The broadcaster says it may reactivate the project when a decision is made.
The proposed pay-TV service was for four channels offering news, sports, films and entertainment.
The plan was first announced in February 2007, and Sky hoped the launch would happen later that year, ahead of Setanta starting its broadcasts of Premier League football on digital terrestrial TV.
But in March, Ofcom began a consultation in the light of Sky's domination of the pay-TV market.
Rivals including Setanta and Top Up TV lodged complaints with the watchdog, leading it to investigate the plans as part of its wider look at the state of pay-TV.
A spokesman for Sky said there was "no end in sight" for Ofcom's investigation and that they had taken some "pragmatic decisions".
"The Picnic team have done everything they can to prepare for launch and there's nothing left to be achieved until Ofcom makes its mind up," he added.
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Ofcom said that its objective was to carry out its investigation "as efficiently as possible".
"Any decision to suspend the project is entirely a business matter for Sky," it added.
Up to 70 people could lose their jobs, while Sky has said staff will be deployed where possible.
The spokesman added that Picnic would still be "good for consumers and a good opportunity for Sky" and may revisit the plan when there is "regulatory clarity".
One channel on Picnic would have seen the Discovery Channel broadcast factual programming between 0600 and 1800 with Sky One simulcast in the evening.
The second channel would have offered Disney children's programming during the day and Sky Movies at night.
The third channel would have been a simulcast of Sky Sports 1.