John Ward had said earlier he was optimistic the Kenyan government would meet his pounds 500,000 claim.
Kenya's Attorney-General Amos Wako said Mr Ward had filed a civil suit to claim compensation and the Kenya government had denied that it was liable in law to pay such compensation.
"I wish to deny emphatically that the Kenya government has agreed to compensate John Ward," Mr Wako said in statement.
Mr Ward, who is travelling to Kenya to join a team of investigators launching a fresh inquiry into his daughter's death in 1988, said he had put on hold formal legal action to regain the costs.
Mr Ward has employed a full-time private investigator in Nairobi in a bid to find his daughter's killers. His persistence was rewarded earlier this year when the Kenyan government agreed to a new inquiry into her death.
Two game wardens were acquitted in 1992 after the trial judge accused the police of a cover-up to protect Kenya's tourist industry. The Kenyan government agreed earlier this year to a new inquiry.
"When the Kenyan Attorney General was asked at a press conference about my claim, he said `I am quite sure that Mr Ward's contribution to the overall inquiry will be recognised'," Mr Ward said yesterday.
"That was about six weeks ago and since then I have been told once or twice, unofficially, that that is what they had in mind.
"Since then I have had no official contact and no-one has approached me about it," Mr Ward added.
Mr Ward said a writ for compensation lodged last year at a time when the Kenyan government was refusing his demands for a new inquiry was now "on the backburner" in the hope that an out of court settlement was in the offing.Reuse content