A parliamentary vote on the bill, which has the support of the ruling Democratic party, was stalled in July amid vehement opposition from right-wing and centre-right conservative parties.
Gentiloni said at the time that the vote would be dropped until later in the year due to other “urgent deadlines”.
The announcement of the delay also came after a surge in migrant arrivals in June which brought the total arriving since the start of the year to almost 100,000. It also followed a poll which showed dwindling support for the legislation among Italians, even though such a path to citizenship exists in many other EU countries and despite supporters insisting the draft law has nothing to do with newly-arrived migrants.
Currently, children born to immigrant parents in Italy have to wait until they turn 18 before being eligible for citizenship.
The bill was also scrapped from the senate's September calendar after failing to garner enough support in the upper house.
But Gentiloni insisted on Thursday it remained “a job to do”.
“It's still summer, the commitment we talked about remains," he said.
Under the proposed legislation, one of the parents would have to have been legally present in Italy for five years for children born here to be granted citizenship, so it would not apply to those refused asylum and ordered to leave the country.
Along with the far-right Northern League, opponents include the Popular Party (AP), a small centrist party in the ruling coalition led by foreign minister Angelino Alfano.
The number of people arriving on Italy's shores has fallen since the Italian government launched a crackdown on NGO search and rescue ships operating off the coast of Libya in the Mediterranean in July.