Transport Secretary Grant Shapps has accepted that he must redetermine the Stonehenge road tunnel project after his High Court defeat last month.
He has decided not to appeal the court’s quashing of a development consent order (DCO) for the £1.7bn tunnel near the world heritage site.
Mr Justice Holgate found Mr Shapps did not take into account two specific appraisals from an Environment Statement and a Heritage Impact Assessment of additional assets on the land, and therefore did not form any conclusion upon the impacts upon their significance.
A Department for Transport spokesperson said: "We have decided not to appeal the High Court decision on the A303 Stonehenge scheme.
“The Secretary of State will re-examine the application and make a fresh decision on this scheme and an update will be provided in due course.”
This did not mean the scheme had been cancelled, the DfT said.
Law firm Leigh Day, which acted for campaigners opposed to the project, said Mr Shapps will now have to redetermine the application for the A303 where it passes the site.
This would require him to set out which further matters he feels are necessary for him to consider in light of the court’s judgment, Leigh Day said.
Campaign group Save Stonehenge World Heritage Site wants the scheme abandoned but said that if it proceeded a new draft DCO should be submitted.
Leigh Day solicitor Rowan Smith said: “At the very least, the secretary of state must go back to the drawing board and lawfully assess not only heritage impact but also the alternatives to the scheme which were originally ignored.
“Our client will respond to any further consultation, and be ready to bring a fresh challenge before the courts, if the secretary of state again falls into legal error.”