President Harriet Geoghegan said yesterday the decision was made after the executive considered the costs - "both financial and in terms of relations with the university" - of continuing with its appeal against a High Court judicial review of the code of conduct.
In October, the association lost its High Court challenge to the university's right to use the code to discipline students.
Justice Warwick Gendall found in favour of the university and ruled the code could legally cover off-campus conduct which impacted on the university's standing and reputation.
In December, the association decided to appeal the court's decision.
Ms Geoghegan said the disagreement with the university had created tension and had "severely impacted our ability to make progress on issues that affect both the university and the students".
She referred to issues raised by changes to the tertiary sector signalled by the Government.
"We've gone as far as we can really in terms of opposing it and the appeal would have cost a huge amount."
Ms Geoghegan said the "crucial outcome" now would be to have student representation on the three-member appeals board reinstated so students were fairly represented when the board dealt with disciplinary matters.
The university had suggested, she said, there was "scope to negotiate" the issue.
"We are working with the university to settle this, without having to go through the court system."
Student representatives were excluded from the appeals board after students moved, in 2006, to oppose the code of conduct.
The university council considered a conflict of interest would occur if students were represented on the appeals board when students had moved to completely oppose the code.
Justice Gendall upheld that view.
Ms Geoghegan indicated a new vote on the code of conduct was likely once students had the opportunity to consider the court had found the code to be legal.
Describing the association's decision as "very good news", university vice-chancellor Prof Sir David Skegg said in a statement yesterday it removed "one of the barriers to full participation by student representatives in our disciplinary processes".
