Abbas' reversal came as a result of intense U.S. pressure, Palestinian officials said. The report by respected justice Richard Goldstone will now lie dormant for at least six months rather than be sent to the U.N. General Assembly with possible recommendations for action.
Israel, which vehemently denies the war crimes allegations, has warned that dealing with the Goldstone report now would derail peace efforts.
The Obama administration is pushing hard to restart Israeli-Palestinian negotiations, and a senior U.S. envoy is returning to the region in coming days to try to narrow gaps over the terms of such talks.
Israel launched the three-week war to quash militant rocket barrages from Gaza that had terrorized residents of southern Israel for years. The U.N. report accused Israel of using disproportionate force and targeting civilian areas. It faulted Hamas for firing rockets indiscriminately at Israeli towns. Both sides have denied committing war crimes.
The Palestinian decision to suspend the campaign for war crimes prosecutions was first reported late Thursday as the U.N. Human Rights Council in Geneva was considering a vote on the Goldstone report. With the Palestinians out of the picture, Arab and Muslim supporters followed suit, and the vote was deferred to March.
Since then, anger in the Abbas-run West Bank and the Hamas-controlled Gaza Strip has been building.
Leaders of the Palestine Liberation Organization met late Saturday and demanded action.
Planning Minister Ali Jarbawi said he would seek an explanation at a Cabinet meeting on Monday, saying "someone made a mistake."
"There was a wrong decision, and this is terribly bad," he said.
In an apparent attempt at damage control, Abbas announced he has appointed a three-member committee to look into how the decision was made. The announcement, made on the Palestinian news agency Wafa, did not say whether Abbas himself would come under scrutiny.
Abbas' critics are unlikely to go after Abbas personally and are more likely to seek the dismissal of advisers seen as encouraging him to take the decision.
Abbas aides have defended the decision, saying the Palestinians needed more time to win international support for the Goldstone report.
But on Sunday, Abbas' spokesman said the Palestinian economics minister, Bassem Khouri, had resigned. It was unclear whether the resignation was to protest Abbas' decision, and Khouri declined comment.
In a rare sign of public criticism, a prominent Palestinian commentator, Zakaria Mohammed, said Abbas was clearly to blame. "People are furious at him and his decision," he wrote on the independent "Faisal" Web site.