The Football Association confirmed to Press Association Sport that City informed them they would not be challenging the four-match suspension, punishment for Balotelli's apparent stamp on Tottenham's Scott Parker at the Etihad Stadium on Sunday.
In addition to Wednesday night's game at Anfield, a 2-2 draw which saw Liverpool progress to the final 3-2 on aggregate, Balotelli will also miss the Barclays Premier League encounters with Everton, Fulham and Aston Villa.
The FA confirmed the outcome shortly after Wednesday night's 6pm deadline to submit an appeal.
City assistant manager David Platt hinted at the course of action on Tuesday, although it is believed City officials debated long and hard about it on Wednesday as they are still not entirely convinced referee Howard Webb failed to spot the original incident last weekend.
Even so, it would be a difficult case to argue given Webb states otherwise and there was a possibility the ban could be extended for a frivolous appeal.
It is unlikely to sit well with the Italian though.
On Tuesday, his agent Mino Raiola accused Webb of being a "coward" and added: "If the English don't start to protect Mario a little bit more, we will have to look at other alternatives and leave the UK."
While there may be some sympathy over Balotelli's sense of being victimised, given team-mate Joleon Lescott and former England striker Peter Crouch both escaped without punishment at the weekend over offences many felt warranted a red card, many will argue that justice has been done.
Most concurred with Tottenham manager Harry Redknapp's post-game assessment of what appeared to be a blatant and needless kick in the head. And of the huge number of former players that have commented on the matter, only Lee Dixon gave Balotelli the benefit of any doubt on the matter.
The Football Association have certainly not been impressed by the anti-Webb attacks, leading to a strident defence by chairman David Bernstein.
"Howard Webb is a fantastic referee and a great ambassador for the sport, his ability and integrity are beyond question," said Bernstein.
"He has the utmost respect from within football in England and around the world. That could not have been demonstrated more clearly than in 2010 when he was chosen to referee the UEFA Champions League final and the FIFA World Cup final, and this summer he has been selected for UEFA Euro 2012.
"We all have a duty to respect our referees, (and) to question their integrity or imply anything other than total impartiality is reckless and unfounded.
"It harms the perception and treatment of referees at every level of football, and we must not allow that climate to exist.
"Referees have only one live opportunity to make a judgement call on those instances that they see in a fast-paced game.
"They do not have the benefit of numerous camera angles and replays, they make these decisions with honesty and integrity."