Culture minister John Penrose has said it "isn't easy" to free up licensing of live music "without opening unwanted public safety loopholes elsewhere".
Campaign group Live Music Forum says it casts doubt on the Government's willingness to reform soon — although Penrose stressed that he hasn't "parked" the issue.
The Government has promised "radical" plans to reduce red tape in live music licensing following calls from campaigners to grant exemptions for gigs that attract fewer than 200 people.
However, the Local Government Association has been lobbying against any loosening of restrictions, arguing that it could cause disorder.
The Home Office, which regained formal control of alcohol licensing earlier this year, is also rumoured to have concerns about the impact of live music reform.
Last month Phil Little of the Live Music Forum wrote to Penrose urging him to act.
The minister's response, seen by the Morning Advertiser, says: "I agree that it is important we remove any unnecessary red tape...but we need to get this right.
"That's why I want to make sure I've properly considered the options before seeking the agreement of Ministerial colleagues and announcing specific proposals.
"I promise I haven't given up or simply 'parked' the issue, but finding an answer which solves the problems without opening unwanted public safety loopholes elsewhere isn't easy.
"I will keep pushing and will let everybody know as soon as there's anything to announce."
Slipped back
Hamish Birchall, who heads the Live Music Forum, said: "In my view, the campaign has slipped back at least two years because I don't believe there's any chance of the Coalition Government implementing small gigs exemptions within the next year."
Birchall said he's now putting his faith in the Live Music Bill from Liberal Democrat peer Lord Clement-Jones, set to receive its second reading early next year, which includes exemptions for small gigs among other measures.
Meanwhile, Clement-Jones has tabled a question in Parliament asking the Government "what risks to public safety or public amenity arise from the performance of live music in workplaces that are not adequately covered by existing public safety and nuisance legislation, irrespective of licensing?"
The question must be answered by 29 November.
Earlier this month the Department for Culture, Media and Sport promised to "cut red tape to encourage the performance of more live music", but no timetable was given.