John Griffiths, the Welsh Environment Minister, scrapped the plan after more than five years of debate, protests across the country and two court cases.
Farmers, who wanted to kill badgers to stop the animals spreading the cattle disease bovine tuberculosis, were disappointed with the decision.
However animal rights activists argue that vaccination is a much more sensible way forward.
Mr Griffiths said instead of a cull, a five-year vaccination programme will start in the bovine TB hotspot of north Pembrokeshire.
"At present I am not satisfied that a cull of badgers would be necessary to bring about a substantial reduction in cases of TB in cattle," he said.
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