David Cameron has dropped plans to repeal the 1701 Act of Settlement which forbids Catholics or anyone married to a Catholic from becoming monarch.
Negotiations to reform the Act began last year when Gordon Brown entered into talks with Buckingham Palace and the leaders of 15 Commonwealth countries whose approvals any amendment would require.
But Nick Clegg signalled this week that the talks had ended and that the coalition had no intention to push the reform ahead.
Mark Harper, the Tory minister for political and constitutional reform, told MPs in a written statement: “There are no current plans to amend the laws on succession.”
The decision may dismay Lib Dem MPs such as Lorely Burt, former equality spokeswoman, who has campaigned vigorously in the past to repeal the Act.
But several senior Church figures, including Cardinal Cormac Murphy-O’Connor and Bishop Kieran Conry of Arundel and Brighton, have said they do not think it is a major issue for most Catholics.
Some Catholics also oppose any amendment that would contribute to the disestablishment of the Church of England.
Lord Rees-Mogg, writing in the Times, said “anything that weakens the Church of England weakens Christianity in England”.
Mr Brown said last year that the reform would also remove the principle of primogeniture and open up the succession to women.
He said: “I think in the 21st century people do expect discrimination to be removed and they do expect us to be looking at these issues.”
A few days earlier Lib Dem MP Evan Harris had tried to introduce a Private Members’ Bill to abolish what he described as an “outrageous discrimination against Roman Catholics”.
But his proposal foundered after the then Justice Secretary Jack Straw said a Private Members’ Bill was “not the appropriate vehicle” for reform.
The Act, passed in 1701, was intended to prevent the return of Stuart Catholics to the throne. It ruled that the King or Queen must swear to maintain the Church of England.