Scientists say the strain accounts for 90% of new Covid cases in South Africa.
The study, involving around 2,000 people, found the vaccine offered "minimal protection" against mild and moderate cases of Covid-19.
South Africa has received 1m doses of the AstraZeneca jab and was due to start vaccinating people next week.
Speaking at an online news conference on Sunday, South African Health Minister Zweli Mkhize said his government would wait for further advice on how best to proceed with the Oxford-AstraZeneca vaccine in light of the findings. The trial was carried out by the University of the Witwatersrand but has not yet been peer reviewed.
In the meantime, he said, the government will offer vaccines produced by Johnson & Johnson and Pfizer in the coming weeks.
"Unfortunately, the AstraZeneca vaccine does not work against mild and moderate illness," Prof Shabir Madhi, who led the study, told the briefing.
He said that the study had not been able to investigate the vaccine's efficacy in preventing more serious infections, as participants had an average age of 31 and so did not represent the demographic most at risk of severe symptoms from the virus.
Prof Sarah Gilbert, Oxford's lead vaccine developer, said vaccines should still protect against severe disease.
She said developers were likely to have a modified version of the injection against the South Africa variant, also known as 501.V2 or B.1.351, later this year.
Experts say vaccines could be redesigned and tweaked to be a better match for new variants in a matter of weeks or months if necessary.
Early results from Moderna suggest its vaccine is still effective against the South Africa variant, while AstraZeneca has said said its vaccine provides good protection against the UK variant first identified in the UK.
Early results suggest the Pfizer-BioNTech vaccine protects against the new variants.