The move ends the bill's current chances of becoming law.

It comes after Scotland's highest civil court ruled earlier this month that the UK government acted lawfully in blocking the bill from receiving royal assent.

Westminster has now confirmed it intends to seek reimbursement for the legal costs incurred defending its decision.

In a statement to MSPs at Holyrood on Wednesday, social justice secretary Shirley-Anne Somerville apologised after the decision not to appeal the ruling was covered by the media ahead of being announced in the Scottish parliament.

Ms Somerville said it will not be withdrawn, adding that Holyrood was open to working with the UK government to compromise on the bill.

She also hinted at potentially working with a future Labour government.

Ms Somerville said: "Due to the intransigence of the current UK government, I'm confident that any repetition of our offer to seek compromise would again be rebuffed.

"We will therefore focus on working with an incoming UK government which we hope will have more respect for devolution and is willing to work together, even when sometimes we disagree."

The gender reform bill battle

The Gender Recognition Reform (Scotland) Bill was passed by MSPs just before Christmas last year.

It aimed to simplify the process for trans people from the age of 16 to obtain a gender recognition certificate (GRC) and officially change their legally-recognised sex.

Critics argued the proposals undermined women's rights and single-sex spaces.

The bill became a constitutional dispute in January when the UK government took the unprecedented step of using a Section 35 order to stop the bill from receiving royal assent and becoming law.

Scottish Secretary Alister Jack had argued the bill clashed with UK-wide equality laws and differing systems of gender recognition north and south of the border would create "significant complications".

The Scottish government launched a legal challenge and a three-day hearing took place at the Court of Session in Edinburgh in September.

Earlier this month, Lady Haldane delivered her judgment and ruled the UK government's veto was lawful.

Although now confirming no more action will be taken, the Scottish government would have been able to appeal further through the Scottish courts, and ultimately to the Supreme Court in London.

Read more:
Why is the bill controversial?

'You deserve to be respected, included and supported'

Ms Somerville accepted that "many trans people will be disappointed" by the decision not to appeal the Court of Session's ruling.

She said: "To them, I say this: The Scottish government will never waver in our commitment to your rights.

"You deserve to be respected, included and supported.

"You are not a threat and you will always be able to live your lives free from prejudice and abuse in the type of Scotland we want to see.

"We will continue to work towards a society that is equal and fair and where people can live as they are, just as we will continue to protect the democratic pillars of this, Scotland's parliament."

'The Scottish government chose to pursue this litigation'

Scottish Secretary Mr Jack has confirmed that the UK government intends to seek reimbursement for the legal costs incurred defending its decision to block the bill.

He said: "The Scottish government chose to pursue this litigation in spite of the cost to the taxpayer.

"These resources would have been better spent addressing the priorities of people in Scotland - such as growing the economy, cutting NHS waiting lists and improving our children's education.

"The UK government now intends to lodge an application with the court seeking our expenses in defending this matter."

'We feel betrayed'

LGBT Youth Scotland believes the decision to shelve the bill will lead to "further isolation of trans young people".

Members of the charity's Trans Rights Youth Commission said: "Many of us are angry, we feel betrayed, and we feel hurt at the lack of support we are feeling from our governments."

The members hope the bill will be taken forward eventually.

The commission added: "The bill sought to take some of the weight off our shoulders, freeing us from the unnecessary scrutiny, stress and humiliation currently required to access a GRC.

"This simple administrative change would mean the world to many trans people, making it easier for our identities to be reflected in our documents. It would allow us a dignified legal process and open opportunities for those at the end of their lives to be respected in death.

"This news will have a huge impact on the trans community, especially on trans young people who are at an important and vulnerable stage in their lives; from job searching to applying to universities, it is crucial to have matching documents.

"Being unable to have a birth certificate that matches the rest of our documents will continue to put trans people at risk of discrimination whilst trying to move through the adult world.

"Many of us are angry and hurt, however, remain hopeful that the bill has not been entirely binned and hope that future governments are able to see it through."