The Department of Justice has sent a letter to House Speaker John Boehner saying it will not ask the U.S. Supreme Court to review a federal appeals court ruling that blocked new graphic warnings on cigarette packages.
The government had until April 5 to appeal the ruling, which struck down the mandate, saying the requirements were a violation of free speech protections.
The U.S. Food and Drug Administration instead will "undertake research to support a new rule-making consistent with the Tobacco Control Act," the FDA said in a written statement, meaning the agency will have to create new warning labels to comply with the 2009 law.
A federal judge in March 2012 had ruled in favor of the tobacco companies, and in August in a 2-1 ruling, the U.S. Court of Appeals for the District of Columbia panel affirmed that ruling.
The American Cancer Society and the Campaign for Tobacco-Free Kids both called on the FDA to quickly develop new warnings.
The cancer society said current warning labels, which have been around for 25 years, are now ineffective.
"Every day that the current warnings remain in place is another day in which the tobacco industry misleads children and adults about the hazards of smoking and the health of the nation is compromised," Chris Hansen, president of the American Cancer Society Cancer Action Network, said in a news release.
The Campaign for Tobacco-Free Kids said it believed the appeals court ruling was wrong on science and the law. It said in a statement that tobacco companies are fighting the graphic warnings because they know they are effective.
"The graphic warnings would counter the industry's deception and tell the truth about how deadly and unglamorous smoking truly is," Matthew L. Myers, president of Campaign for Tobacco-Free Kids, said.
R.J. Reynolds, the tobacco giant involved in the lawsuit, didn't immediately respond to an email seeking comment.
The proposed images include a man exhaling smoke through a hole in his throat; diseased lungs next to healthy lungs; a mouth bearing what appear to be cancerous lesions; a bare-chested male cadaver with chest staples down his torso.
The word and image warning labels would have covered half of the cigarette packs sold at retail outlets and 20% of cigarette advertising.
The federal law in question would also regulate the amount of nicotine and other substances in tobacco, and limit promotion of the products and related promotional merchandise at public events like sporting contests.
Several other lawsuits over the labels are pending in federal court, part a two-decade federal and state effort to force tobacco companies to limit their advertising and settle billions of dollars in state and private class-action claims over the health dangers of smoking.
According to the Centers for Disease Control the percentage of adult Americans who smoke has declined since 1965 from 42.4% to 18.9% in 2011, but the rate has leveled off in recent years.
Cigarette smoking is the leading cause of "preventable death" in the United States, the CDC said, killing about 443,000 people per year as of 2004.