The review also recommended lowering the Party Vote threshold from five per cent to four per cent.
Keeping the coat-tailing provision has the potential to benefit National next election which is short of coalition partners. If Act again wins Epsom, as leader John Banks did last election, and it increases its party vote, Act could bring in more MPs without having to reach five or four per cent. The same goes for United Future leader Peter Dunne in Ohariu-Belmont.
Labour supported lowering the threshold, which would help the Greens if its party vote dropped, and it wanted to get rid of the coat-tailing clause.
Those two elements of MMP have been the most contentious because of occasional electoral results. In 2008, former Act leader Rodney Hide won Epsom and brought four other MPs to Parliament with 3.65 per cent of the vote, while New Zealand First polled higher in the party vote but because it fell just short of the five per cent threshold could not return any MPs to Parliament.
However New Zealand First benefited from the coat-tailing in 1999 when its party vote fell below the five per cent threshold but it returned five MPs because Leader Winston Peters scraped back in in Tauranga by a whisker.
There had been some disquiet that candidates who failed to win an electorate seat could enter Parliament on the list but the review recommended no change to that, nor the ability of sitting list MPs to stand in byelections.
Prime Minister John Key said after leaving the House he did not believe there had been a groundswell for changes to the MMP system.
"If you're really, really going to have major change to MMP you'd want to have either consensus or to put it to the people.''
"It's not a matter of blame - it's just a range of views out there.''
Mr Peters said the decision to reject the recommendations was "appalling.''
"They went through the whole process, very expensive for the taxpayer. It was a serious process and now she has just canned the lot.''
He said Judith Collins had never sought a consensus.
The Greens said the Government was putting politics before the public.
"National is shirking their responsibility to voters to improve MMP,'' said the Greens' spokeswoman for electoral reform, Holly Walker.
"It is undemocratic for National to ignore the results of a referendum and the Electoral Commission's review.
"Consensus is always great to aim for but with the self-interest of the National, Act and United Future parties always likely to derail this process, the responsible thing for the Government to do was to implement the recommendations of the Electoral Commission as a package in time for the next election.''
Two of the other recommendations of the review were to abolish the provision for overhang seats _ which can increase Parliament above the standard 120 MPs if a party wins more electorate MPs than its party vote entitles it to _ and for Parliament to consider fixing the ration of electorate to list seats at 60 to 40.
