Ministers from the EU's 27 member states were expected to nod through the legislation at a routine meeting on Tuesday, after the European Parliament gave its approval last month.
But a spokesman for Sweden, which holds the rotating EU presidency, said EU ambassadors had decided to push back the vote to a later meeting and would "revert to the issue in due time".
Economic powerhouse Germany, which boasts one of the world's biggest car manufacturing industries, said it wants further assurances from Brussels that synthetic fuels could still be used in engines after 2035.
Coming so late in the day, Berlin's objections were viewed as highly unusual since EU member states had already signed off on the ban last year.
Germany's transport minister, Volker Wissing, said that if the vote had been held then Berlin would "not have given its agreement today".
"We have always made it clear that the European Commission should present a proposal on how synthetic fuels could be used in combustion engines after 2035," he said.
The plan to phase out cars running on fossil fuels is a keystone of the bloc's push to become climate-neutral by 2050, with net-zero greenhouse gas emissions.
If Germany had abstained from the vote then it likely would not have passed, since it requires a majority of member states representing at least 65 percent of the bloc's population to go through.
Italy, another major car maker, has already said it is opposed, and Poland and Bulgaria were also expected not to vote in favour.
Berlin's last-ditch move was seen as a product of domestic politics. The liberal Free Democratic Party, which is part of the governing coalition, is seeking to burnish its pro-business credentials after poor regional election results.
European diplomats are hoping that Brussels can reach a compromise with the German liberals by reaffirming its intention to look into the usage of synthetic fuels.