The Government says it will not appeal against the High Court decision ordering it to reconsider the bid to buy the 16 Crafar farms.
The Overseas Investment Office is reassessing the application by the Chinese company Shanghai Pengxin, on the basis that the economic benefit test had not been applied correctly.
The Crafar Farms Purchase Group, which comprises New Zealand farming and Maori interests, sought a judicial review to prevent the farms from being sold, and to have its own bid accepted.
The High Court ruled last month that the economic benefits of the bid by the Chinese buyer were materially overstated in the recommendation from the Overseas Investment Office.
Prime Minister John Key says the Government has had a close look at the decision and has decided not to appeal against it.
Mr Key says the OIO is still reviewing Shanghai Pengxin's application, and he does not know how long it will take to make its decision.