Delhi's 2010 Commonwealth chief Suresh Kalmadi said it would be inappropriate for him to be honorary life president of India's Olympic body.
The sports minister had described the appointment as "totally unacceptable".
Mr Kalmadi is awaiting trial on charges of cheating, forgery and criminal conspiracy. He denies the charges and has pleaded not guilty.
The Congress party politician was sacked from his Commonwealth role in 2011 and spent 10 months in jail before being freed on bail.
"I thank the Indian Olympic Association for conferring the honour of life president on me," Mr Kalmadi said in a letter to Indian Olympic Association (IOA) President N Ramachandran.
"However, I do not feel that it would be appropriate for me to accept this honour at this time. I am confident that my name will be cleared and I will defer acceptance of the honour till such time."
The sports ministry had threatened to cut off ties with the IOA, if it did not reverse the offer of honorary life roles to Mr Kalmadi and another politician facing corruption charges, Abhay Singh Chautala.
Indian social media users ridiculed the offers.
"Suresh Kalmadi & Abhay Chautala have been rewarded for India's terrific performance in the Olympics over the last several years," wrote one commentator, referring to his country's poor record in recent games.
"Yes, Indian Olympic Association, let's motivate our athletes by making #SureshKalmadi their president," wrote another.
Others suggested prominent people they felt would be similarly ill-suited to influential positions because of their backgrounds, with one such tweet suggesting former porn star Sunny Leone should head India's film censors.

Christine Chapman, of the assembly's Communities Committee, said good work was being done - but the Welsh government should speed up efforts.
The latest figures suggest more than one in five people in Wales are living in poverty.
The Welsh government said getting people out of poverty was at the "very heart" of what it does.
Earlier this year, the Communities Committee published a report that stated it was "deeply concerned by the Welsh government's lack of progress in reducing poverty".
Poverty is statistically defined as a household income below Â£271 a week - 60% of the national mid-point average of Â£453.
Figures from the Joseph Rowntree Foundation suggest 23% of people in Wales are living in poverty - a figure which the committee said has barely changed since the early 2000s.
Labour AM Christine Chapman said the Welsh government was "going in the right direction" but the pace of change "needs to be quicker".
"We are a rich country in the main but yet people are still struggling with their heating bills, with their food - that is absolutely appalling," she said.
"There must be a strong message first of all to the UK government that things need to change."
Gemma Jones, a caseworker for Rhondda Cynon Taff Citizens Advice, said despite government initiatives, she sees little evidence of improvement.
"I don't know what's going wrong or what's happening but we're certainly seeing a lot more clients in poverty and not saying I'm better off," she said.
A Welsh government spokesman responded: "All government departments are working relentlessly to tackle the root causes of poverty, by giving children the best possible start in life, helping people to get a job and improving their health and wellbeing.
"We also continue to do all we can to mitigate the effects of the UK government's sweeping welfare reforms and austerity measures.
Sunday Politics Wales is on BBC One Wales at 11:00 GMT on 13 December
A senior Indian politician charged with corruption has turned down an honorary Olympic role amid a storm of protests.
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More urgency is needed to tackle poverty in Wales, a Labour assembly member has said.