“Goodison Park has served the club extremely well but we need to make sure the club has a suitable stage to perform on for the future,” he said.
An initial plan was to build a stadium at Walton Hall Park, a short distance north-east of Goodison, but it was strongly opposed by local protestors.
Mayor Joe Anderson said the site would now remain a park.
“Most people will be aware that I did give a commitment to Everton to support a potential scheme at Walton Hall Park with the aim of regenerating the area and creating new jobs,” he said.
“However, through the work that the club and the council have done, we have concluded that effectively building a new village in north Liverpool with lots of retail space is a step too far in this current economic climate.”
Across Stanley Park at Anfield, Liverpool are in the process of expanding their main stand which will take their capacity to around 54,000.