Residents in both Redcar and Ellesmere Port had raised concerns about the safety of replacing home gas supplies with hydrogen.
They were worried it was more explosive and produced more harmful nitrogen oxide (NOx) than the currently supplied natural gas, though NGN said all safety issues would be addressed.
People living in Redcar also campaigned to be allowed to opt out of any pilot.
In a written statement to the Commons, the secretary of state for energy security and net zero, Claire Coutinho, said the proposed trial could not go ahead “as designed” because the “main source of hydrogen supply” would not be available.
“As such, the government is not in a position to provide support for the trial,” she said.
