Romano Prodi's office confirmed the suspension on Tuesday, adding the EU statesman was deeply upset at the accusation made by two prominent community leaders in a British newspaper.
In a letter to Edgar Bronfman, head of the World Jewish Congress, and Cobi Benatoff, president of the European Jewish Congress, Prodi said he was "both surprised and shocked" by their attack.
The two men had accused the European Commission in an article published by the Financial Times of being "politically motivated" in censoring a report on violence against Jews and releasing an opinion poll concerning Israel.
The article, which appeared on Monday, "goes against our best and mutual interest," Prodi wrote.
He said he had suspended preparatory work for a seminar on European anti-Semitism and the Israeli-Palestinian conflict due to be held next month, but was happy to resume preparations for the conference.
"I sincerely hope you will lay the conditions for resuming as soon as possible a fruitful and indispensable dialogue between our institutions."
Speaking at a press conference in Dublin Tuesday, Prodi said: "Anti-Semitism is still a problem in Europe.
"We must fight against anti-Semitism... There is no problem on the commission side. Our attitude... against anti-Semitism is without any doubt," he added.
In New York, the World Jewish Council slammed the suspension, accusing the EU executive of a "failure of moral leadership".
"The problem of anti-Semitism has to be addressed, and not run away from"
World Jewish Congress vice president
"We think it is the wrong decision," World Jewish Congress executive vice president Elan Steinberg said of Prodi's action.
"The problem of anti-Semitism has to be addressed, and not run away from," Steinberg told journalists.
"This is not about personalities, this is about a failure of moral leadership at a time when anti-Semitism is at the highest level in Europe since the Second World War."
Details of accusations
In their article, Bronfman and Benatoff said the commission was guilty of fuelling anti-Semitism "by action and inaction".
It had released "a flawed and dangerously inflammatory poll" of European opinion in November showing that most people regarded Israel as the biggest threat to world peace, they said.
It had later shelved a report commissioned by the EU's own Vienna-based racism watchdog, the European Monitoring Centre on Racism and Xenophobia, which showed a rise in anti-Semetic incidents committed by Muslims and pro-Palestinian groups in Europe, they alleged.
In his letter, Prodi denied that the commission had censored the report on Muslim anti-Jewish behaviour.
"You know that the Vienna Centre is an independent institution and that the European Commission has no power at all to interfere in its decision," he said.
Prodi described the planned conference as "a good example of the actions we can together put in place so as to intelligently react and respond to the threat of anti-Semitism."
In their article, Bronfman and Benatoff had called it a "major test of European attitudes", adding: "We await its results."