Burton Green will not get a deep-bore tunnel after soaring costs of up to £645million were deemed not to be value for money.
Campaigners have been fighting for the tunnel - which would cut under the road out of sight - for years to prevent houses being demolished and having the railway bisecting their village.
But the latest decision by the Parliamentary select committee means that existing proposals for a cut-and-cover tunnel above ground will go ahead as planned.
The tunnel has already been extended by 50 metres at each end to help mitigate negative effects on the community.
Announcing the decision on Monday, committee chairman Robert Syms said: “Petitioners argued for a deep bore tunnel or a short bored tunnel. The additional cost of a deep bore tunnel would be somewhere between £179.5million and £645million.
“The cost of a short bored tunnel would be between £28million and £32million.
“Even allowing for possible overestimates we have concluded that neither option would represent value for money.”
The committee has instead recommended that HS2 Ltd, which is managing the railway project, continue to work on mitigation measures including a replacement village hall when the existing centre is demolished to make way for the tracks.
MPs called for HS2 Ltd to support the village school curing construction, and for one year afterwards to address fears of a drop in pupil numbers as families move out of the village, or are unable to access the school during construction work.
They also welcomed news that the group will reduce the planned diversion of the Kenilworth Greenway.
It is important that the community sustain itself during several years of construction in the area and that properties acquired from HS2 Ltd for let be well maintained.MP Robert Syms
Mr Syms said: “We have requested that they seek views on location and that the HS2 Ltd budget for the new hall be generous.
“The new facility should be open before the existing hall closes.
“We have encouraged HS2 Ltd to maintain a dialogue with the Greenway Trust and with the local tree warden group.
“It is important that the community sustain itself during several years of construction in the area and that properties acquired from HS2 Ltd for let be well maintained.
“We have received a detailed and satisfactory report from HS2 on rented property maintenance in the area and we expect further reports in due course. We will also be keeping an eye on the success of the Need to Sell Scheme as it operates in this area.”
As it will be bisected by the tracks, Burton Green was described as a special case throughout the petitioning process in what villagers hoped would lead to a change in the current proposals to save their village.
The select committee is expected to make more announcements on changes to the route over the next few days before breaking for the General Election.