An amendment to the Greater London Authority (GLA) Bill put forward by Baroness Hanham last week would have directed Livingstone to chair the London Waste and Recycling Board.
But Hanham withdrew the proposal after DEFRA minister Lord Rooker said it is the mayor's decision not to take part rather than the government's responsibility.
The board consists of the boroughs, the GLA and business leaders. It was proposed after plans for a single waste authority, which Livingstone had wanted, were rejected.
It will manage a £25 million waste and recycling fund, to which the government has pledged £19 million with the rest due to come from the mayor.
Livingstone has declined involvement in the scheme because he claims that the board is not a solution to the city's waste issues.
Instead, he wants to work with the private sector to deliver waste infrastructure. A spokeswoman said: "What we actually need are fewer boards debating the problem and more powers to act."
London Councils insisted that it would press on with establishing the board. It believes that it is the best way to set common goals and keep "local sensitivity" in recycling and waste.
Meanwhile, Livingstone this week launched a campaign to encourage more recycling of domestic waste in the capital.