Attorney General Dominic Grieve has said it would be "inappropriate" for him to review the decision to prosecute an SAS sergeant for illegal possession of a weapon.
Defence Secretary Philip Hammond has written to Mr Grieve to ask him to review if proper consideration was given to the question of whether a prosecution of Sgt Danny Nightingale was in the public interest before the case was brought to court martial.
But a spokesman for the Attorney General's office responded in a statement: "It would be inappropriate for the Attorney General to review either the decision to prosecute or comment on the appropriateness of the sentence. That is a matter for the Court Martial Appeal Court, in due course."
Mr Grieve's response will come as a blow to the family of Sgt Nightingale, who had welcomed Mr Hammond's intervention earlier.
Speaking before the Attorney General's statement, the soldier's wife Sally said the Defence Secretary's action had given her hope that her husband would be released in time for Christmas.
Sgt Nightingale, a father of two who served in Iraq and Afghanistan, is serving an 18-month sentence at the Military Corrective Training Centre in Colchester, Essex, after admitting possessing a prohibited firearm and ammunition.
He pleaded guilty at court martial to illegally possessing a 9mm Glock pistol which had been packed up and returned to him by colleagues after he had to leave Iraq in a hurry to help organise the funeral of two friends killed in action. He also admitted possessing ammunition.
The court martial heard that the gun was a gift from Iraqi soldiers he had been helping to train, but Sgt Nightingale, who had suffered medical problems affecting his memory, said he did not remember having it. His lawyers plan to lodge an appeal later this week, as well as applying for bail.
MPs will get an opportunity to raise concerns about his case with Solicitor General Oliver Heald later, after Canterbury MP Julian Brazier secured a debate in the House of Commons.
Although the MoD is unable to intervene directly in the legal case, it is understood that Mr Hammond's personal view is that it is in the public interest for any appeal to be heard as a matter of urgency.