Ministers have ruled out changes to make it easier for trans people to have their gender legally recognised.
They have rejected calls, backed in a 2018 consultation, for people to be able to change their birth certificates without a medical diagnosis.
Ministers said reform of the 2004 Gender Recognition Act was not the "top priority" for transgender people.
Equality campaigners said it was a "missed opportunity" and showed a "shocking failure of leadership".
But women's rights groups applauded the decision as a "victory for fairness and common sense".
Ministers are pledging action to make it easier for trans people to obtain a Gender Recognition Certificate and to improve healthcare services for them. But LGBT groups had urged them to go much further, by making it easier for people to legally transition from their birth sex and to provide greater protection under the law.
Currently, the Gender Recognition Act requires trans people to go through a long process in order to change their birth certificates. A "self-ID" process, allowing changes to birth certificates without a medical diagnosis, was one of the ideas put forward in a consultation undertaken by the last Conservative government, led by Theresa May.
Of the 102,818 responses received, 64% said there should not be a requirement for a diagnosis of gender dysphoria in the future, on the grounds that being trans was neither a medical nor a mental health issue.
But, in a statement, Equalities Minister Liz Truss said she believed the law as it stood provided the right "checks and balances". Read more via BBC