Banknotes will continue to contain traces of animal products despite objections over the use of tallow in the Bank of England's polymer notes.
Some vegans, Hindus and Sikhs had been unhappy with tallow's use in the new plastic £5 notes which entered circulation in September.
Future production of the polymer £5 notes and £10 notes, plus the £20 to be launched in 2020 will be unchanged.
The Bank said its "has not taken this decision lightly".
"The Bank fully recognises the concerns raised by members of the public, both prior to and during the consultation," it said.
Tender for production of the £20 had been put on hold while the Bank assessed whether palm oil or coconut oil should be used instead.
However, that announcement proved controversial with conservation groups, who warned that palm oil production can wreck rainforests and displace people living in them if it was not sustainably sourced.
The Bank launched a public consultation, receiving responses from 3,554 people. Of those who expressed a preference, 88% were against the use of animal-derived products and 48% objected to the use of palm oil-derived additives
"The Bank has had to balance these responses against its other public duties and priorities as well as the other evidence gathered over the past months," a spokesman said.
"The use of palm oil raises questions about environmental sustainability and the Bank's suppliers have been unable to commit to sourcing the highest level of sustainable palm oil at this time.
"Value for money was also a consideration in the Bank's decision."
The additional cost of switching to a new type of production had risen to about £16.5m over the next 10 years, according to the Bank.
It said it had consulted with the UK Treasury, as the additional cost would have had to have been taken on by the taxpayer.
HM Treasury advised the Bank that it does not believe switching to palm oil derivatives would achieve value for money for taxpayers.