The government has poured cold water on proposals for a "latte levy" to be introduced in a bid to increase recycling rates.
Recommendations from the Environmental Audit Committee called for a 25p charge to be added to the price of every drink sold in a disposable cup.
Only a fraction of plastic cups are currently recycled, because the plastic lining inside means they can only be processed at a handful of sites.
Responding to the proposal, government ministers appear to favour retailer-led discounting for customers using reuseable cups.
In the formal response to the committee, the government said: "Coffee cups make up 0.7% of total paper packaging waste in the UK. We believe it is important to look at the packaging and waste management system as a whole."
Another recommendation that disposable cups be banned from 2023 if 100% were not being recycled was also rejected.
The news has been welcomed by Kate Nicholls, CEO of UKHospitality, who said: "The government has recognised the proactive voluntary work already being carried out by the sector to reduce waste. Venues are already beginning to remove plastic straws and implement loyalty schemes for customers who bring their own reusable cups. Consumer trends need to change, and this must by driven by business, but through partnership rather than punitive measures that will only heap more costs on businesses trying to help tackle this problem."
Others have hit out at the government's apparent failure to act, with Environmental Audit Committee chairwoman Mary Creagh commenting: "The UK's throwaway culture is having a devastating impact on our streets, beaches and seas. Our report recommended practical solutions to the disposable packaging crisis. The government's response shows that despite warm words they plan no real action."
Many coffee retailers, including Pret A Manger, Costa and Starbucks, already have discount schemes for customers with reusable mugs.
Starbucks is also undertaking a 5p disposable cup charge trial in 25 of its London stores.
The coffee giant has had a reusable cup incentive in place since 1998, with customers given 25p off all drinks, but currently only 1.8% take advantage of the offer.
A spokesperson said a previous scheme, which saw it increase its discount to 50p, had little impact leading to the decision to launch the three-month charge trial in February.
Videos from The Caterer archives