Communities Secretary James Brokenshire today rejected the proposals in a letter written to Sheffield City Region mayor Dan Jarvis and the 18 council leaders who back a One Yorkshire agreement.
Last year a detailed submission was handed into the Government setting out how the creation of a region-wide mayoral authority with a host of new powers could boost the economy by £30bn a year.
But the Conservative Cabinet Minister said in his letter: “The Government has thought carefully about the arguments for One Yorkshire and discussed them in detail with local leaders.
“I recognise the ambition that underpins these proposals but they do not meet our devolution criteria.
“However, we are prepared to begin discussions about a different, localist approach to devolution in Yorkshire. We know there is local appetite for other devolution elsewhere in Yorkshire, with representations having been made previously by the Leeds City Region, York and North Yorkshire and the Humber Estuary.
“In line with current Government policy, we would be prepared to consider any proposals submitted on the basis Sheffield City Region deal is completed, honouring the Mayor’s commitment to local people and unlocking £900 million investment in the area.”
The statement issued by the Ministry of Housing, Communities and Local Government detailing Mr Brokenshire's position did not specify what devolution criteria the One Yorkshire bid was being judged against.
In the letter to Mr Jarvis and other local leaders, seen by The Yorkshire Post, he adds: "We appreciate the enthusiasm and dedication that has come from yourself and the Yorkshire leaders in developing this idea of a whole Yorkshire devolution.
"Having carefully considered all the material we have received, we do understand the ambitions that you have for your areas, and I understand the value and potential that you see in harnessing local people’s sense of identity with Yorkshire.
"This is the context in which I am now writing to you to suggest how we might all now move forward with devolution in Yorkshire.
"The One Yorkshire concept is novel. It focuses on an area that is far greater than any past local administrative area for Yorkshire or any of today’s functional economic city regions.
"It would involve significant departures from the type of devolution deals that we have successfully put in place elsewhere in terms of geography, governance and purpose.
"The mayoralty would cover the whole of Yorkshire – with a population of 5.5 million people and widely varying rural and urban areas with competing needs. Accordingly, the Government considers that the One Yorkshire devolution proposals do not meet our criteria for devolution."
Last month, Northern Powerhouse Minister Jake Berry praised the ambition of the One Yorkshire deal in an interview with The Yorkshire Post.
He said those leading the One Yorkshire charge have recently presented plans to his department, in what he describes as a “pretty complex, comprehensive document”.
“Now, they would not expect us to either say yes or no,” he said. “They want us to give it the proper consideration and work for it to go in on a cross-governmental basis before we talk seriously about whether we can deliver on their ambition for One Yorkshire”.
Responding to the letter, Liberal Democrat peer Lord Wallace of Saltaire said: "This is a huge disappointment. David Cameron criticised Yorkshire Councils for their inability to agree on devolution.
"Now that there is a wide consensus, across local authorities, political parties, employers associations and trade unions, the government won’t listen. The Conservatives pledged that devolution would come from the bottom up; but in Yorkshire they want to impose from Westminster down."
And Keighley MP John Grogan said: "This is a massive snub by Ministers to the councils of Yorkshire and the people they represent.
"A more shameless example of Whitehall knows best would be hard to find. The Government is basically proposing the balkanisation of Yorkshire and the creation of competing fiefdoms with all the duplication and waste of resources that will bring.
"Following the example of the Prime Minister’s hero Geoffrey Boycott now is the time to stay resolute and keep batting on."
Attempts to agree a more limited devolution deal in Yorkshire have previously failed to get off the ground. The Sheffield City Region deal signed in 2015 by South Yorkshire leaders has yet to be fully implemented after leaders in Doncaster and Barnsley pulled out in favour of a Yorkshire-wide deal.
A Leeds City Region deal - covering West Yorkshire, Harrogate and Craven, faltered over concerns in North Yorkshire about the ‘loss’ of two districts and opposition from West Yorkshire Conservative MPs worried about the near-certainty that the area’s mayor would be Labour.
Despite working on a common economic agenda around ports and wind power, the idea of a Humber deal and mayor failed to gain traction amid the longstanding division between the authorities on both sides of the estuary.