The government had been studying options for the future of the 49 percent stake, Greening said in a statement on the department's website.

Responses to a call for evidence as well as research by government officials "highlighted the strategic importance of NATS to the UK and the far-reaching implications of a sale at this time," she added.

She cited ongoing work on the Single European Sky agenda and the Single European Sky Air Traffic Management Research Programme (SESAR) - EU-backed plans to coordinate airspace regulation.

These factors were considered alongside the potential value of a sale as well as the benefits of receiving dividends from the shareholding, Greening said.

"I have concluded that it is in the best interests of the British taxpayer, the travelling public and the company itself to retain the government's shares in NATS at this time," Greening said.

Air traffic controllers including Germany's DFS as well as infrastructure funds are interested in buying the minority NATS stake a group of airlines owns, the airlines said in April.

NATS employs 5,000 people and provides air traffic control services for planes flying in UK airspace and part of the North Atlantic.

The government estimated the value of NATS as a whole at around 1 billion pounds.

Alongside the government's 49 percent stake, the airline group - which includes British Airways (ICAG.L) and Virgin VA.UL - holds 42 percent, staff own 5 percent and UK airport operator BAA, owned by Spain's Ferrovial (FER.MC) has 4 percent.

(Reporting by Helen Massy-Beresford; Editing by Steve Addison)

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