The Rams were keen to rearrange the game to a date later in the season, when there would be no limit or a smaller cap on attendances.
Supporters are allowed to watch fixtures live again, in line with the Government's roadmap out of lockdown, but with limited capacities, meaning Sunday's derby clash would have only been watched by approximately 600 fans.
Due to a lack of matchday income, Dewsbury approached Batley about postponing the fixture to a date when more supporters could attend.
The Bulldogs supported the move, with the Rugby Football League agreeing to the postponement on Tuesday.
A Batley statement confirmed: "This Sunday’s game against Dewsbury Rams will be postponed and rearranged for a later date in the year.
"Limitations on attendance would mean only a handful of the expected crowd would be able to attend, and may have needed to be limited to home support only.
"After over a year with no matchday income, the Rams were keen to play the fixture when a bigger crowd may be able to attend, and give the game the support it deserves.
"We are fully behind the decision and support our neighbours completely in this move. The fixture will be rearranged for a date yet to be confirmed."