Construction will be paused at the end of this year when infrastructure work is completed on new aircraft stands, a full-length parallel taxiway and new passenger facilities.
The move will hit plans for extending the terminal and a new east pier.
Bam Nuttall is carrying out the infrastructure contract to prepare the site for expansion.
Robert Sinclair, CEO of London City Airport said: “For the time being, we have taken the decision to focus our attention on delivering the vital additional airfield infrastructure which will provide our existing and prospective airline customers with the potential to bring new generation aircraft to this airport in greater numbers, which will be a crucial aspect of how we build a better, more sustainable airport.
“Completing the terminal extension and new east pier very much remains part of our future, and, with the foundations for both in place, we stand ready to take those projects forward when demand returns.
“In the months ahead we will work with airlines and Government to help restore confidence to the UK aviation market and we will continue to support our local authority and our communities as they plan for life beyond the crisis.”