The Northampton Free Church Federal Council now says it has no power to probe the workings of the Fellowship.
Council secretary, Mr Harold Fussey, said: 'We gave the matter a considerable amount of thought, but we have come to the conclusion that we have no authority to do anything.'
The Jesus Fellowship was discussed at this months council meeting - as Mr Fussey promised at the end of last year following a call for action by the Chronicle and Echo.
The Chronicle and Echo called on the council and another organisation, the Northampton and District Council of Churches, to examine the workings of the sect.
At the time, the Council of Churches said it had no authority to investigate.
Action was urged following the death of a man associated with the Fellowship.
Mr Paul Andrews (27), a former computer salesman, was staying with the sect when he was involved in a road accident and died in Northampton General hospital two months later.
Mr Andrews, whose parents live in Surrey, told a psychiatrist he had heard God speaking to him in his head and after his accident had been in contact with Satan.