The MCA said it had “heard the strength of feeling” on the proposed changes.
A spokesperson added: “We have agreed with Ministers to pause plans to move to a revised volunteer model.
“The work of the service is vital to keeping people safe, and this pause gives us the time to engage extensively with our hard-working officers, understand more deeply the potential impact of any changes, and ensure their views help inform the decisions we take on how to shape the service.”
CROs make up the bulk of the Coastguard Rescue Service (CRS), the volunteer arm of HM Coastguard.
There are more than 3,500 of them who carry out rescues around the UK’s coast, including those stuck in mud, water and on cliffs, as well as assisting in searches for missing people.
They are officially classed as volunteers, but can claim about £11 per hour for responding to callouts or undertaking training exercises.
A minimum payment equivalent to three hours – about £33 – can be claimed even if in an incident is resolved before that.
However, the MCA wanted to remove that payment later this year after a judgement from the Court of Appeal in January.
It ruled that while CROs were described as “volunteers”, a contract came into existence whenever they attended callouts or training sessions for which they had a right to claim payment.
In response, the MCA said it would move to the “revised volunteer model”.