Planned Parenthood and the ACLU are celebrating the judge's decision, but anti-abortion groups are urging the state to appeal the ruling.
A judge granted the preliminary injunction sought by Planned Parenthood of Indiana and Kentucky. The law was to set to take effect Friday.
Planned Parenthood and the American Civil Liberties Union of Indiana sued the state in April.
The ACLU says the ruling will impact what obstacles other states can enact when it comes to abortion access, including Indiana.
The federal judge indicated a ruling will come before the law takes effect July 1st.
Planned Parenthood of Indiana and Kentucky sued the state in April, calling the law unconstitutional and seeking to prevent it from taking effect July 1.
Planned Parenthood and the ACLU are suing the state over a bill passed this year, which bans abortions based on race, sex, and disability.
The lawsuit claims the county's policy requiring sponsorship of rallies on courthouse grounds violates the First Amendment.
Magistrate Judge Debra McVicker Lynch denied IU's bid to intervene in the complaint filed by Planned Parenthood. Lynch says IU can file its own lawsuit.
The waivers cover the costs of some services, but changes the state made to requirements meant some beneficiaries received less money for such services.