Northern Southland Health Ltd - the charity which owns the centre - has confirmed it will not seek a judicial review of the Southern District Health Board's maternity strategy.
That document, unveiled last year, included a plan to downgrade Lumsden from a birthing facility to a "maternal and child hub".
The proposal was opposed by many in the region.
Local residents staged a protest march and launched a petition.
The NSHL board also took legal advice about challenging the decision in court, but said the grounds for lodging an application were limited, the chances of success uncertain and the cost high.
"Even if such an application were to be successful, the only remedy is that SDHB would be required by the judge to reconsider their decision and it would be entirely open to them to come to the same conclusion to close Lumsden Maternity," it said in a statement.
"As a result, the board has resolved not to pursue an application for judicial review against SDHB."
The decision to rule out court action did not mean the challenge to the SDHB's decision was over, the board said.
"This does not mean that the board agrees with the decision to close Lumsden Maternity but that, after considerable time and effort and following legal advice, the board has come to the conclusion that a judicial review application is not a viable option to challenge SDHB's decision.
"The board believes political pressure is now the only viable option to reverse the decision at this 11th hour."
Late last year Clutha-Southland MP Hamish Walker's petition opposing the Lumsden downgrade decision was placed on hold by Parliament's health select committee until any possible legal action was resolved.
Yesterday, Mr Walker said in view of the board's decision he would now ask the committee to urgently investigate his petition.
"There has been a huge community outcry to save the centre and I'm in support of doing whatever we can do to make this happen," Mr Walker said.
