Arma 3 has been officially postponed until 2013 by developer Bohemia Interactive.
The decision comes as two of its staff remain in jail following their arrest over allegations that they were scouting a military base on the Greek island of Lemnos in the name of research for the game.
All parties have continually denied the claims.
"We've been in the process of implementing changes that will help us innovate as a studio under unexpected circumstances – facing problems we simply couldn't have imagined”, Arma 3 project lead Joris-Jan van ‘t Land, who has taken over from the now departed Daniel Musil, stated.
We're still trying to make sense of the situation and hope that our colleagues will be released soon. Although their plight has certainly affected us on a personal level, we continue working on the tasks identified as key to the release of Arma 3.
"I hope this update provides some answers regarding the status of the project. We're currently sorting the specifics so we can deliver a more complete announcement at the beginning of next year."
The studio says that the additional development time enables the project to reach its full potential”.
Bohemia is also working on a standalone version of DayZ along with its original creator Dean Hall.