Valls also said that the need for new citizens to have permanent jobs before they are given a passport would also be lifted, but a relatively tough requirement in terms of proficiency in French is being maintained.
"You don't become French by answering multiple choice questions and I reject the idea that only those with permanent employment contracts can become French," Valls said.
The minister is himself a naturalised French citizen of Spanish origin.
The citizenship test had been due to be introduced on July 1, 2012 under legislation adopted under the previous government designed to address concerns over the perceived failure of some immigrants to adapt to the French way of life.
But following the return of Valls' Socialists to government in June, the measure has not been applied.
Valls said a requirement for new citizens to have the same ability to understand and speak French at the level expected of 15-year-old natives would be maintained.
He also stressed that candidates must support the core values of the French republic, in which he included the concepts of secularism and solidarity as well as the classic trio of liberty, equality and fraternity.
"Naturalisation has to remain the natural conclusion of a successful integration," Valls said.
The assessment of candidates' level of French and their perceived support for "republican values" is at the discretion of officials in town halls who process applications. The language requirement does not apply to the over 65s.
Valls said the number of people acquiring French citizenship through naturalization – a total of just under 120,000 in 2010 – had since fallen by more than 30 percent as a result of the previous right-wing administration's policies.
Eric Ciotti, the national secretary of the main opposition UMP, attacked Valls's reforms, saying: "French nationality should be earned, not just given away."
Marine Le Pen, leader of the far right National Front, echoed the theme, accusing the minister of "dispensing nationality like metro tickets."
Many of those naturalised are teenagers born in France to foreign parents who have an automatic right to citizenship when they turn 18. Under the new rules, foreign children who spent five years in education will benefit from a "strong assumption" that their citizenship application should be granted.