Defense attorney Theodore Wells said he advised Cheney's lawyer over lunch that his testimony would not be needed. Wells also said he planned to rest his case without calling Libby.
In December, Wells announced that he would call Cheney as a defense witness. Historians said that it would have been the first time that a sitting vice president would have sat as a witness in a criminal case.
Libby is accused of lying and obstructing the investigation into the 2003 leak of CIA operative Valerie Plame's identity. Plame is married to prominent war critic Joseph Wilson.
Defense attorneys say they plan to rest their case Thursday, but first they want to question three CIA briefers to discuss Libby's daily intelligence briefings.
Libby is accused of lying to investigators about his conversations with reporters regarding Plame. Prosecutors say Libby learned Plame's identity from Cheney and other officials, relayed that information to reporters, then concocted a story to cover it up.
Libby says he was preoccupied with national security intelligence and honestly forgot details about Plame. He says he learned it from Cheney, forgot it, and learned it again a month later from NBC's Tim Russert and believed that it was new information.
U.S. District Judge Reggie B. Walton asked Libby whether he was sure he did not want to testify. Libby responded: "Yes, your honor."
Libby's defense team had planned to call Cheney to testify about his former aide's memory and his intense workload. Putting Cheney on the stand would have opened him up to cross-examination about how closely he was monitoring Wilson's criticism of President Bush's decision to invade Iraq.
Wilson, who conducted a CIA-sponsored trip to Niger, said he debunked prewar intelligence that Iraq sought to buy uranium from the African nation. That intelligence was still used as a basis for the invasion.
Fitzgerald argues that Libby was eager to discredit Wilson because he viewed Wilson as a threat to the credibility of Cheney and Bush.
By not taking the stand, Libby is giving up part of his defense. Walton said he would not allow defense attorneys to tell jurors that Libby considered his national security responsibilities more important than Wilson. Only Libby could tell jurors what he considered important, Walton said.