A health tribunal found 70-year-old Sutcliffe no longer needs treatment for any mental disorder at Broadmoor hospital, a high-security and expensive facility in the east of England.
In 1981, he was convicted of 13 murders and seven attempted murders of women between 1976 and 1981 and given 20 life sentences.
He was transferred to Broadmoor in 1984 after he was diagnosed with paranoid schizophrenia.
"Peter Coonan will remain locked up and will never be released for his evil crimes. Decisions over whether prisoners are to be sent back to prison from secure hospitals are based on clinical assessments made by independent medical staff," a UK Ministry of Justice spokesperson said.
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"The High Court ordered in 2010 that Peter Coonan should never be released. This was upheld by the Court of Appeal. Our thoughts are with Coonan's victims and their families," he added.
Sutcliffe hails from Bradford in the West Yorkshire region of England, which led to him being referred to as the "Yorkshire Ripper".
He was caught when police found him with a prostitute in his car.
Before he was moved to Broadmoor, the killer spent three years at Parkhurst prison on the Isle of Wight.
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