Dutton had previously said a Coalition government would force public service workers back into the office.
“We’re listening to what people have to say,” Dutton said on Today.
“We’ve made a mistake in relation to the policy. We apologise for that. And we’ve dealt with it.”
Critics of the policy said it would unfairly affect women, especially parents, who relied on flexible work.
The move comes as another poll shows Labor’s prospects for retaining government improving, with the latest Newspoll showing a 52-48 per cent two-party preferred result in their favour.
Dutton accused Albanese of wrongly claiming the Coalition intended to end flexible work arrangements outside government jobs as well.
“We never had any intention for work-from-home changes that we were proposing in Canberra to apply across the private sector,” he said.
Dutton today is also trying to reframe voters’ perception of his pledge to cut 41,000 jobs from the public service.
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He told Today it was “always the plan” to achieve this through a hiring freeze and natural attrition, rather than mass cuts and forced redundancies.
The job cuts were part of a pledge to bring in $7 billion in government savings.
“There’s no change to the costing at all because the original plan of the natural attrition and the freezing was what we’d always had,” Dutton said.