Deputy Industry Minister Mona Sahlin said the remains of 757 passengers and crew would stay where they were. She admitted the government had made mistakes in its handling of the issue, and expressed "deep and sincere regret".

Another proposal - to cover the wreck in concrete - is also to be abandoned. The minister said it was proposed to monitor the wreck to keep looters away.

Fierce waves

The ferry was sailing from Stockholm to the Estonian capital Tallinn when it sank after fierce waves ripped off the boat's bow door and water poured into the vehicle deck.

The official investigation said the bow door's locks were flawed, but a separate report commissioned by the ship's manufacturer concluded that the locks had been poorly maintained.

The disaster threw Sweden into a national agony, which for many was only worsened by mixed signals over whether the bodies would be recovered. One hundred and thirty seven people survived.

Many victims' relatives had said they could not complete their mourning unless the bodies were brought to land. Sweden had initially said that efforts would be made to bring up the remains, but then backed off and proposed instead that the wreckage be covered under hundreds of tons of sand and rock to prevent looting.

Relatives outraged

Many relatives were outraged by the idea and the government, attempting to resolve the controversy, appointed a panel to recommend what should be done. The panel, including the head of the Swedish Red Cross, recommended last November that as many bodies as possible be recovered.

Although two-thirds of Swedish relatives wanted the bodies returned, the governments of Finland and Estonia, who are party to an agreement with Sweden over the wreck, opposed the idea.

Swedish relatives have denounced the government's decision but it has been welcomed by the families of Estonian victims.