NIREX, the British nuclear waste disposal authority, is not to appeal against a decision refusing approval of plans for a £2 billion sterling underground dump near Sellafield, Cumbria.
Environmentalists who opposed the project said there now had to be a radical rethink of the government's attitude on how to deal with the growing stockpile of radioactive waste.
A site near the Sellafield reprocessing plant had been earmarked for the dump 700 metres below the sea bed, which was also officially opposed by the Irish Government.
But after a long running public inquiry, Mr John Gummer, the British environment secretary, earlier this month rejected an appeal against Cumbria County Council's refusal to grant planning permission for a rock laboratory to test the suitability of the site.
Nirex, which has drilled 28 test boreholes near the village of Gosforth against fierce local opposition, complained yesterday that the "ground rules seemed to have changed" during the inquiry process.
Sir Richard Morris, chairman, said: "We cannot get the information to show whether the site is safe or not without a rock laboratory. But it now appears we cannot win approval for a rock laboratory without first showing the site is safe."
After the Nirex board's decision not to contest the ruling, they agreed there were now "major questions" about how the programme of deep disposal of low and intermediate level nuclear waste could go forward.
Sir Richard Morris said: "We have always said that we do not set the rules but that we will abide by them. Radioactive waste exists now - it will not go away."
Dr Rachel Weston, senior nuclear research officer for Friends of the Earth, accused Nirex and the nuclear industry of "irresponsibility" in maintaining" that radioactive waste could be disposed of easily.
She also said state owned British Nuclear Fuels Limited should not have "misled" other governments into believing their waste could be disposed of at the site.
"We need to go back to the drawing board now," said Dr Weston.
"The industry needs to stop pretending the disposal of nuclear waste is easy and to pretend there is some magic wand that will make it go away is just irresponsible."
BNFL said last night it could, continue to store intermediate level waste safely at Sellafield for an "indefinite" period, or until a decision was made on how to dispose of it.