In October, it emerged that Channel 5 was considered the frontrunner to acquire the fifth HD channel slot on DTT, essentially Freeview, after Ofcom closed its deadline for applications.
However, the regulator today said that the Richard Desmond-owned broadcaster has dropped plans to launch Channel 5 HD on Freeview in April 2012, despite the channel already being available on Sky and Virgin Media.
Ofcom said that the spare capacity will be handed back to the BBC, and it will be up to the corporation to decide the future of the additional HD network.
"Ofcom has been notified by Channel 5 Broadcasting Limited that it does not wish to proceed with its application for the fifth HD capacity slot on digital terrestrial TV at the present time," said Ofcom in a short statement.
"Subject to any future Ofcom decision to re-advertise the slot, the capacity will remain with the Multiplex operator BBC Free-to-View Limited and can be used by it for BBC services or services provided by a third party via a commercial arrangement."
Freeview HD currently offers four HD channels - BBC One HD, the BBC HD Channel (due to turn into the BBC Two HD under BBC plans), ITV1 HD and Channel 4 HD - but a fifth channel is scheduled to launch in April next year.
This latest development with Channel 5 bears similarities to the last time that the broadcaster was supposed to launch its HD network on Freeview.
After Channel 5 failed to meet Ofcom's requirements for launch of Channel 5 HD in March 2010, the capacity was handed back to the BBC, which enabled the surprise launch of BBC One HD in October that year.
The BBC now faces another dilemma over what to do with the spare capacity. It could maintain carriage of the BBC HD channel to provide an outlet for HD content from BBC Three and BBC Four, or it could launch an entirely new network, possibly one dedicated to HD sport in time for the Olympics.
Alternatively, an agreement could be reached with ITV, Channel 4 or another third-party broadcaster to bring a different HD channel to Freeview.