Bosses at the Hampshire landmark said they had "listened carefully" to feedback and subsequently shelved their plans for the memorial.
A spokesman said: "We have listened carefully and, alongside support and enthusiasm for the project, we have also been fully aware of serious concerns expressed regarding the type of sculpture, the location and the timing of this significant commission.
"As a result of this listening, Chapter has decided, with regret, not to go ahead with this concept. There are other priorities within the cathedral and city that need to be the focus of attention."
Cathedral bosses had been hoping to raise £250,000 for a monument which would "seal her place in the rich and complex identity of Winchester". A sculptor, Martin Jennings, had been commissioned to create it.
According to the local Southern Daily Echo newspaper, the proposals attracted a "barrage of criticism". One letter said a gravestone and nearby museum devoted to Jane Austen were "adequate".
Another stated: "There is a strong body of opinion that rejects the idea of another Jane Austen statue anywhere, or any statue at all in the Cathedral Close".
Austen died in Winchester approximately 200 years ago. She was buried in the cathedral.
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