The Asgard II, which sank last September off the coast of France, will not be lifted from the seabed.
Minister for Defence Willie O’Dea has announced that he has accepted the recommendation of the Asgard Committee, Coiste an Asgard, to leave the ship where it is.
Minister O'Dea said that there was a risk that €2m could be spent on a salvage effort and maintenance that might be wasted.
The Minister's statement reveals that Coiste an Asgard feared parents would not let their children sail on a vessel that had already sunk once.
The founder of a campaign to raise the vessel, Gerry Burns, has described the Government's decision as a national disgrace.
Speaking on RTÉ Radio, Mr Burns, who is a former Master of the Asgard II, said the ship was a national treasure and it was a sad day for those who wanted her raised and restored.
Labour Party spokesperson on the marine Senator Michael McCarthy has described the decision as "the ultimate hypocrisy,"
He said the Government had spent millions on electronic voting machines, but would not raise a vessel that had trained young people.
He said he was sick to his back teeth of Minister Willie O'Dea 'speaking out of both sides of his mouth'.
The 30-year-old vessel has represented the nation around the world at tall ships' races.
The Minister has come in for strong criticism for leaving the vessel so long on the seabed without a decision about its future.
Salvage experts had said it could have been raised quickly after the sinking.
Thousands of people have signed a national petition to raise the vessel.
Minister O'Dea said that planning would begin to acquire a new vessel, similar in design to Asgard II, but with a steel hull.
A Naval Service yacht, which is being refurbished and can provide only eight places, is to be used to continue the national sail training programme and some places are to be reserved for Irish trainees on the Norwegian sail training vessel, the Christian Radich.
