The ruling Kuomintang (KMT) expelled Wang Jin-pyng from the party and removed him from his post after he was accused of leaning on prosecutors involved in a court case against a member of the opposition Democratic Progressive Party (DPP).
Ma said Wang was "unfit" to head the legislature after alleging that the 72-year-old had tried to influence the outcome of the graft case against DPP party whip Ker Chien-ming.
The KMT, led by Ma, appealed that decision but the high court dismissed it last week.
The party then said they would appeal to the Supreme Court but spokesman Yin Wei was quoted today as saying the leadership had decided not to do so.
"There have been concerns about 'political stability' since the incident surfaced and some urging not to appeal," the spokesman cited Ma as saying, according to local media.
Wang's removal sparked fears of a split within the party in a deepening political scandal that has already seen two top government officials, including the justice minister, resign.
Despite the u-turn, the KMT will continue an ongoing civil lawsuit against Wang to solve the issue of his party membership, a move some say is symbolic as it may run until Wang's term expires in 2016.
Ma's popularity has taken a severe hit in the wake of a series of scandals culminating with the accusations against Wang.
Prosecutors admitted last week that they had tapped lawmakers' phones while investigating Ker's case.
