The Werkstatt Deutschland ("Workshop Germany") organisation said it was forced to cancel the ceremony scheduled for October 3, the Day of German Unity, because of "massive criticism" of its decision to honour Putin for his "contributions for the dependability and stability of the Russian-German relations".
In a statement, its board of trustees said, Workshop Germany was sharply criticised by German politicians across the political spectrum, former recipients, human rights organisations and intellectuals for its decision to honour Putin.
They expressed the view that Putin, who is widely criticised in the West for his authoritarian leadership and disregard for human rights, especially during his tenure as the Russian president, is not the right candidate for the prize.
Besides Putin, three other nominees, Palestinian Prime Minister Salaam Fayad, Mexican Foreign Minister Patricia Espinosa and Turkish-German author and teacher Betul Durmaz also were to be honoured at the ceremony.
The statement said the board of trustees will take a decision in the coming days on the future of the annual award, which was instituted in 2003 to honour persons, who make a contribution to awakening, renewal and pioneering spirit through their work and become inspirational to other people.
The award, which has no monetary component is awarded to four persons every year, who are seen as "role models" in Germany for the outside world or vice-versa.
Among its past recipients are former Russian President Mikhail Gorbachev, who ushered in the dramatic political changes which led to the collapse of communism in Eastern Europe, Queen Sylvia of Sweden, former president of the Czech Republic Vaclav Havel, former German chancellors Helmut Kohl and Gerhard Schroeder, Afghan President Hamid Karzai, Greek Primer Minister George Papandreou, Israeli President Shimon Peres and founder of Wikipedia Jimmy Wales.
Cem Ozdemir, co-chairman of Germany’s opposition Green party and Jimmy Wales stepped down from the board of trustees of the organisation in protest and Havel threatened to return his prize, which he received in 2009, if the organisation went ahead with its plans to honour Putin.
Danish artist Olafur Eliasson had already returned his prize,according to media reports.
Withdrawal of Putin's nomination for the "Quadriga" prize comes just two days before the two nations hold their inter-governmental consultations in Hannover.
Chancellor Angela Merkel and Russian president Dimitri Medvedev will lead their delegations to the meeting, where further strengthening the economic cooperation between the two countries will be high on the agenda.
Several economic cooperation agreements and business deals are expected to be signed in their presence.