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Get your free copyDefra claimed that there are already too many variations of the speciality across Britain, as they had been made outside the county for over 20 years.
The Lincolnshire Sausage Association has been campaigning for PGI status for more than seven years.
If the status was granted, it would mean Lincolnshire sausages would have to be made in the county, with 70% ground or minced pork, packed in natural casings and flavoured with sage.
Jim Paice, food and farming minister, said, “British food is outstanding and we’re working hard to protect the local heritage of certain foods through PGI status. But with so many variations on the recipe, and 95% of sausages sold under the Lincolnshire Sausage label being made outside the county, the application as it stood could have seriously damaged businesses and jobs.
“We remain open to looking at other options which would allow producers in Lincolnshire to highlight the traditional and local nature of their sausages, without potentially damaging the overwhelming majority of manufacturers,” he added.