The glitch, caused by a bug-fixing update issued last month, would have cost the developers a significant sum to correct in a move they did not see as economically viable.
"Polytron and their investor, Trapdoor, made the decision not to work on an additional title update for Fez," said Microsoft in a statement issued to Giant Bomb.
"Microsoft Studios chose to support this decision based on the belief that Polytron/Trapdoor were in the best position to determine what the acceptable quality level is for their game.
"While we do not disclose the cost of Title Updates, we did offer to work with Trapdoor to make sure that wasn't a blocking issue. We remain huge fans of Fez."
Polytron originally pulled the patch from Xbox Live when it was discovered to corrupt save files for the game, but it will soon be made available again and users will be prompted to update the next time they play.
The studio insists that the error has mainly affected users who are near the end of the game, and does not occur when a new campaign is started up.
> Read Digital Spy's review of 'Fez'
Watch the Fez launch trailer below: