Former England star Dyer, 32, returned in March to the club where he launched his career and his one-month deal expired after Saturday's 2-1 home win over Crystal Palace, in which he was a late substitute.
Return: West Ham have deneid Ipswich permission to keep Kieron Dyer on loan for the rest of the season
Ipswich boss Paul Jewell said: 'I spoke to West Ham manager Avram Grant and asked if he would allow Kieron to stay with us.
'But he said that in view of his own club's current situation he would prefer to have Kieron back at Upton Park to help their relegation fight, which I fully understand.'
Dyer's injury woes, which have blighted his time with the Hammers, flared up again at Portman Road as he only started one game and came off the bench in three others.
Desperate: West Ham boss Avram Grant is running out of time to save the Premier League strugglers
He joined West Ham in a ?6million deal from Newcastle in August 2007 and suffered a double leg fracture in only his third appearance.
That setback, together with other injury problems, has restricted him to just 17 senior starts in his time with the Hammers and his contract is due to expire in the summer.
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Explore more:People: Kieron Dyer, Paul Jewell Places: Newcastle, United Kingdom