Bulgaria's Minister of Economy and Energy, Vassil Shtonov, suspended work on the 930km-pipeline until it conforms to European Union law.
South Stream will stretch across the Black Sea to southern and central Europe, providing another gas transit route for Russia's Gazprom.
But the EU is worried about the gas producer also owning a pipe network.
Bulgaria stopped work on South Stream in June after tensions in Ukraine.
On Tuesday, the minister ordered the Bulgarian Energy Holding to suspend any competitive bidding procedures and the signing of any contracts relevant to South Stream.
Bulgaria is almost entirely dependent on Russian gas and has been trying for years to diversify its sources.
South Stream's offshore section would run beneath the Black Sea across territory run by Russia, Bulgaria and Turkey. The onshore section will cross Bulgaria, Serbia, Hungary and Slovenia.
Currently, 15% of the EU's gas supply from Russia is piped through Ukraine. South Stream would by-pass the country.
Laurent Ruseckas, global gas analyst at the economic research firm IHS said: "Bulgaria has been strongly supportive of South Stream, which will give it greater security of gas supply - but as the situation in Ukraine has deteriorated, it has come under increasing pressure from Brussels to stop co-operating with Gazprom on the project.
"The government had already announced a suspension of South Stream in June, but in practice activity seemed to continue. The current announcement could be a bit more serious, although time will tell."
The construction of South Stream began in late 2012, with the first gas deliveries expected in 2016. The pipeline is due to become fully operational in 2018.
Bulgaria has again halted work on the Russia-led pipeline project South Stream.