A statement released on Leeds' official website confirmed that Beckford had agreed to remain at Elland Road and see out the final five-and-a-half months of his existing deal.
Newcastle have now missed out on two of their three leading January targets after Matt Kilgallon also turned down an opportunity to join the Magpies in order to remain at Sheffield United.
They will complete a hattrick of failures if they are unable to secure Danny Simpson's permanent transfer from Manchester United, a situation that looks increasingly likely after the full-back rejected an offer of £8,800-a-week.
Simpson is due to play the final game of his current loan deal against West Brom tonight.
The failure to land Beckford is a considerable blow, with Leeds having rejected three separate offers from Newcastle.
A third bid of around £1.75m is understood to have been lodged at the end of last week, but after Leeds officials turned it down, Beckford was called in for talks.
The striker had previously expressed a desire to join Newcastle, and had submitted a formal transfer request in an attempt to push through a deal.
But he has been persuaded to remain at Elland Road until the summer, when his status as a free agent is likely to attract interest from Premier League clubs.
I'm keen to draw a line under the situation and now we can all move on together, said Leeds boss Simon Grayson. I never wanted Jermaine to leave and we have turned down offers for him.
We could have cashed in, knowing what could happen at the end of the season, but the chairman has backed me all the way, and it demonstrates what we are looking to achieve.
Jermaine has always given 100 per cent and hopefully his goals will play a big part for us over the next few months.
What we have achieved over the past 12 months has been a team effort by everyone, and I'm delighted we have resolved this situation to assist us in what we are aiming to achieve.
Meanwhile, Newcastle are considering re-signing a club favourite after Nolberto Solano spent the second half of last week training with their first-team squad.
Solano, a free agent after a proposed deal with League One side Colchester United collapsed at the start of this month, was invited to train with the Magpies in order to stay fit.
The 35-year-old, who made more than 300 appearances in two separate spells at St James' Park, is understood to have impressed the Newcastle coaching staff, who have been surprised by his level of physical fitness.
As a result, Newcastle boss Chris Hughton is ready to offer Solano a short-term contract until the end of the season.
The former Peru international is desperate to have one last hurrah in English football, and is willing to accept a relatively low wage offer in order to secure a five-month deal with the Magpies.