The Equality and Human Rights Commission has withdrawn an appeal on behalf of a gay couple who were refused a double room at a Cornish hotel.
Peter and Hazelmary Bull were ordered to pay Steven Preddy and Martyn Hall, from Bristol, £1,800 each in damages for the incident in September 2008.
The gay couple's lawyers lodged a cross appeal to clarify the law around how damages are calculated in such cases.
But the EHRC said the appeal was "an error of judgement" by its legal team.
John Wadham, the commission's legal director, said in a statement that the cross appeal on behalf of Mr Preddy and Mr Hall had been withdrawn on Friday morning.
"It was filed initially because of an error of judgment on the part of our legal team," he said.
"They submitted the cross appeal in an attempt to clarify the law around how damages are calculated in cases such as this.
"This resulted in it appearing that Steve Preddy and Martyn Hall were seeking to increase the amount of damages they receive because Mr and Mrs Bull's Christian beliefs had led them to break the law.
"This was not our intention and it was certainly not the intention of Steve and Martyn.
"I would like to confirm that public money will not be spent funding a claim for increased damages in this case."
'Clarify the law'
A judge ruled in January that the owners of the Chymorvah Hotel, near Penzance, had acted unlawfully.
Mr and Mrs Bull have appealed against the judgement.
They said as Christians they did not believe unmarried couples should share a room.
A commission spokeswoman added that the organisation would still resist Mr and Mrs Bull's appeal.
Mr Preddy and Mr Hall added in a statement: "We brought this case to clarify the law, not to make money.
"We have always believed that the original award was a fair one, and are not seeking any further compensation."