Families of men killed at the Pike River mine say Cabinet's decision not to pay compensation is another example of the Government failing to take responsibility for the disaster three years ago.
A Royal Commission found the then Department of Labour failed to properly supervise operations, so the families of the 29 men who died say the Government is liable.
The men died after a series of explosions at the West Coast mine that began on 19 November 2010.
The Cabinet decided on Monday it would not step in to pay the more than $3 million in compensation awarded the families by a court.
Prime Minister John Key says paying what the now defunct Pike River Coal cannot would set an unwanted precedent.