The woman has not seen the children, whom she fathered when she was living as a man, since leaving a haredi, or ultra-Orthodox, community in Manchester in 2015.
At a hearing in London on Monday, she withdrew her application for an order allowing her to have contact with the children, The Guardian reported.
The family has remained unidentified in the British media.
The children’s mother has said in court that if the children had direct contact with the transgender woman, the parent body of their schools would not allow other children to play with them. The testimony of several community rabbis backed her assertion.
The children also could be denied places at good yeshivas and schools, be prevented from marrying into some families and the entire family could be shunned by the community, the court has been told.
In January 2017, a British high court judge in the family division ruled that the transgender woman could not see her children, then aged 3 to 13, citing “the upholding of the rights of the children to have the least harmful outcome in a situation not of their making.” She was allowed to indirectly contact the children with letters four times a year on Jewish festivals and their birthdays.
An appeals court later ordered the family division court to reconsider its decision. The father’s application was withdrawn before a new decision could be announced.