Estonian government spokeswoman Kateriin Leini told AFP ministers had reviewed a report by a commission which upheld previous findings and concluded there were insufficient grounds to launch a new investigation.
The ferry “Estonia” sank on the night of September 28, 1994, as it sailed from the Estonian capital Tallinn to Stockholm in Sweden.
All but 137 of the 989 passengers and crew on board perished. Most of the victims were Swedish.
An international probe in 1997 ruled that faulty bow doors which gave way in a storm had caused the accident, the worst in the Baltic in peace time.
Estonia and Sweden opened new investigations in 2005 after many relatives of the dead, shipping experts and politicians claimed the ferry went down following an explosion.
An acknowledgment by Sweden that Soviet military equipment was carried on the ferry on several occasions in 1994 gave credence to the theory.
Estonia had broken free from the crumbling Soviet Union in 1991, but the Red Army only left the country on August 31, 1994.
An Estonian report issued in 2007, said chemical analyses had ruled out an explosion, at least near the bow doors.
But a relatives’ association has continued to push for a brand new investigation.
The bow-door fault still “must be considered to be the most likely scenario of the sinking of the ship”, said a follow-up Estonian study examined by the government Thursday.
It said that other theories “cannot be convincingly refuted by theoretical studies based on the existing evidence.”
But it also suggested there was little sense going back to the drawing board because “yet another revision of the testimonies would not give any more certainty about any of the suggested scenarios of the sinking of the ship.”
The United States has acknowledged it holds documents about the disaster but that they cannot be released for security reasons, further fuelling those who think there is more to the sinking.