He now plans to create a planning system that is "fast, fair, and fit for purpose" through the continued development of a Single Strategic Planning Policy Statement.
Speaking to Members of the Legislative Assembly (MLAs) on Tuesday, Durkan said an amendment to restrict judicial reviews of planning decisions would breach obligations under the European Convention on Human Rights.
He said: "Although the executive and, indeed, any minister responsible for planning, might not always welcome such challenges, it is fair to say that such a process is a fundamental right of citizens."
"Had the Bill been approved by the House, I have no doubt that it would have been subject to legal challenge by people from outside the House, and possibly by some within it," he added. "That would have led to a complete slowdown of the planning system, which is entirely contrary to the original aim of the Bill."
He also raised concerns over an amendment that sought to introduce economically significant planning zones (ESPZs) – a plan that had already proved controversial with his predecessor, Alex Attwood.
Durkan said the intent of the amendment was to make the Office of First and Deputy First Minister (OFMDFM) a new planning authority in Northern Ireland.
He said: "I see no good reason to introduce ESPZs and to vest such planning powers in another department. It would introduce only confusion into the planning system.
"It is an attempt not only to grab existing planning powers from my department but to disempower future local government."
The Bill has now been dropped in its entirity, after Durkan said he "did not want to waste more time" on it. He will now seek to include aspects of the Bill in the Single Strategic Planning Policy Statement, which is expected in draft form by "the turn of the year".