The Czech environment ministry is planning to put up to a two-year moratorium on granting licenses for shale gas exploration until new legislation is put in place, the ministry said.
During the moratorium, the ministry would look at preparing geological and mining legislation that is clear for potential exploration companies, Reuters reported.
"Existing Czech legislation is not prepared for such technically complicated research like there is in the case of shale gas," the ministry said on its website.
The ministry cancelled a provisional shale gas exploration license for Australian-based BasGas in April, saying a government commission made legal and procedural errors during the application process.
The company's owner, Hutton Energy, told Reuters it may consider pulling out of the Czech Republic due to an uncertain regulatory landscape.
Europe is divided on shale, with countries like France and Bulgaria halting exploration due to environmental concerns.
But in Poland, which sits on huge potential shale reserves, concerns about security of supply have trumped environmental worries over the drilling method known as fracking, which uses large amounts of fresh water and chemicals to extract shale gas.
The Czechs have far less estimated reserves than Poland. The biggest potential area is in the south near Austria where Czech mining company MND hopes to extract gas as soon as 2014.