The Home Office has refused to grant powers to South Yorkshire Police to stop EDL marches in Rotherham.
An application was made for the Government to allow police forces in extreme circumstances to ban certain protests.
In Rotherham, hopes were high that new legislation would allow South Yorkshire Police to ban EDL marches in the town, which have cost millions of pounds to police over the last two years and which traders say have affected business.
The Home Office has turned down the application.
The EDL has held a number of marches in the town in the wake of the Rotherham child sexual exploitation scandal.
An independent report commissioned by Rotherham Council and published in 2014 revealed that 1,400 children were sexually exploited between 1997 and 2013 by men of largely Pakistani heritage while authorities failed to act.
South Yorkshire Police and Crime Commissioner, Dr Alan Billings, said: "The Home Office has now made it clear that they will not change the law to allow the Home Secretary in very particular circumstances to ban these repeated marches by the EDL.
“We had asked for a change when these conditions are met and when the police and local authority recommend.
"This would mean for repeated protests – month after month that are disturbing business in the town centre and causing anxiety for shoppers. These marches cause community tensions and cost excessive amounts in police overtime
“The EDL claim to be doing this for victims of child sexual exploitation, but victims have come out publicly saying they don’t want this. Victims and survivors on my panel have said this.
“We cannot ban protests therefore South Yorkshire Police has to manage the protests when they come. South Yorkshire Police are now experienced in getting this right.”
A Hme Office spokesman said: "The powers under the Public Order Act 1986 for managing protests and demonstrations are kept under ongoing review.
"The recommendations made by the South Yorkshire Police and Crime Commissioner’s Independent Ethics Panel in 2015 were considered as part of this work and there are no current plans to change the legislation.
"Peaceful protest is a vital part of a democratic society. It is a long-standing tradition in this country that people are free to gather together and to demonstrate their views, however uncomfortable these may be to the majority of us, provided that they do so within the law.
"There is, of course, a balance to be struck. Protestors’ rights need to be balanced with the rights of others to go about their business without fear of intimidation or serious disruption to the community. Rights to peaceful protest do not extend to violent or threatening behaviour and the police have powers to deal with any such acts.
"The management of demonstrations is an operational matter for the police."