The decision was taken by an Army board consisting of three generals, a senior official and Armed Forces minister Doug Henderson. The Ministry of Defence said the board decided that there were exceptional reasons for the retention of the two guardsmen.
In an impassioned reaction Jean McBride, the mother of Peter McBride who was killed, said: "I have just been told that the life of my son meant nothing. He was just another kid who was shot down. What the hell." The decision was attacked by civil liberties groups and by Sinn Fein, the latter describing it as "legitimising what was in effect a random and brutal killing".
The guardsmen, James Fisher and Mark Wright, were released on licence in September by Dr Mowlam, who made it clear at the time that she did not believe they should remain in the armed services. She had no comment to make on yesterday's decision.
Republicans and others had complained about the early release of the prisoners, even though scores of IRA and loyalist prisoners are in the process of being set free under the terms of the Good Friday Agreement.
In the fatal incident Mr McBride, the father of two children, was hit twice in the back as he ran away from soldiers in the New Lodge district of north Belfast in September 1992. The crown case was that he had been stopped by a four-man Scots Guards patrol who searched him with his arms fully extended.
The crown said the soldiers had also felt an object he had in his right hand, said to be a T-shirt in a plastic bag, and then questioned him for several minutes. He had then run off chased by the four soldiers, two of whom fired five shots at him, hitting him twice in the back.
The defence case was that the soldiers had opened fire believing their lives were in danger. Wright said he opened fire because he believed the youth had a coffee-jar bomb and a gun, and had fired several shots. Fisher said he believed the dead man had a coffee-jar bomb. The trial judge said he was satisfied there was no justification for the action of the soldiers. He added that Fisher had deliberately lied to the court and that Wright's evidence was "even more frail".
The MoD said the Army board had heard representations from the guardsmen and the views of the victim's family.
It said they had served a long prison sentence, had behaved in exemplary fashion in prison, and had previously unblemished military records.
The Ulster Unionist Party security spokesman Ken Maginnis said he was absolutely delighted with the decision. The Independent MP Martin Bell, patron of the group campaigning for the guardsmen's release, said: "I'm delighted. Although I acknowledge it was a difficult decision, I always thought it was inconceivable that the Army should stand by these two during the years of their detention and then abandon them when they were free men."Reuse content