The change would have significantly reduced school fees for parents ahead of the school switching to a co-ed model next year.
"We are disappointed but the ministry has been very good in that they have left the door open so that we can have another conversation with them when demographics change in the years ahead," headmaster Trevor Barman said.
He said the main reason given for the decision related to there being enough room in nearby public schools for children to enrol.
Barman said the school would likely reapply to become an integrated school "a few years down the track" when the region's population grew and other schools neared capacity.
He explained if the school was successful in becoming an integrated school the Government would financially support them by covering the cost of staff.
It is understood about 75 per cent of the school's budget goes toward staffing.
In May last year the chairman of the Hereworth School Trust Board, Jonathan Hensman, said it was a goal to make the school "even better and stronger for the next 100 years.
"We're committed to ensuring that all the things that make Hereworth what it is; our heritage, special character and a strong sense of community will be part of our future as an integrated school, and will form a key part of our discussions with the ministry.
"However, the past few years have been very challenging. Our roll, which we would like to be higher, has been steady at around 200, and our financial situation is becoming increasingly tight with rising costs.
"Continuing with the status quo and doing nothing is not an option."
The school would still push ahead with its plan to change to a co-ed model in 2023.
It would expand from a current roll of about 235 boys to 300 boys and girls next year across Years 0 to 8 which is the largest roll in its history.
Barman said the school was excited about welcoming girls into the school community next year.
He said they had considered progressively introducing girls into different year levels, but had instead decided to introduce them across all year groups in 2023.
"We did look at that quite closely but what we have found is there is demand associated in all year groups."
The school is also building a state-of-the-art indoor sports facility and hopes to begin construction on that project in the coming months.