Social media giants Facebook, Google and Twitter will escape a $200 million tax in next month's budget, despite coming under intense pressure from the government over their activities in the wake of the Christchurch terrorist attack.

The government has retreated on its agenda-driving digital tax status, balking at Prime Minister Scott Morrison's push in last year's budget to make Australia a world-leader in the digital space.

Prime Minister Scott Morrison. Credit:AAP

The shift comes as both Labor and the Coalition pile onto social media companies, accusing them of failing to produce algorithms that could stop hate speech spreading across the internet while prioritising those used to rake in billions of dollars in advertising.

Despite Britain, France, Italy, Hungary and India cracking down on millions of dollars in tax revenue leaking overseas, consultation with the industry's stakeholders in Australia has not been completed since submissions closed in November.