Police have been ordered not to arrest or prosecute homosexuals until parliament has debated the issue, said Ralph Kasambara.
At present, homosexual acts carry a maximum sentence of 14 years in jail.
Some Western leaders have suggested they would cut aid to African countries failing to recognise gay rights.
Homosexuality is illegal in most African nations and remains a controversial topic in Malawi‘s traditionally conservative society.
One of Malawi’s most influential traditional leaders, Chief Kaomba, has urged the government not to let parliament change its laws on homosexuality.
“This is against our culture,” he said.
The BBC’s Raphael Tenthani in Malawi’s main city, Blantyre, says repealing the legislation would be an unpopular move with many church leaders, as well as the wider population.
In 2010, two Malawian men were arrested and charged with public indecency after saying they were getting married.
The prosecution drew international condemnation and led to some donors withdrawing budget support – a major blow to one of the world’s poorest countries.
The then-president Bingu wa Mutharika – who died of a heart attack earlier this year – pardoned both men on “humanitarian grounds” but said they had “committed a crime against our culture, against our religion, and against our laws”.
However Mr Mutharika’s successor, Joyce Banda, told MPs shortly after taking office that she wanted to overturn the ban on homosexuality.
In her first state-of-the-nation address to parliament, Mrs Banda said: “Some laws which were duly passed by the august house… will be repealed as a matter of urgency… these include the provisions regarding indecent practices and unnatural acts.”
The authorities are hoping the suspension of anti-gay legislation will encourage public debate and help parliament make a decision on the matter.
“If we continue arresting and prosecuting people based on the said laws and later such laws are found to be unconstitutional, it would be an embarrassment to government,” Mr Kasambara told Reuters news agency.
“It is better to let one criminal get away with it rather than throw a lot of innocent people in jail.”
Human rights group Amnesty International welcomed the announcement as a “historic step” forward.