Nigel "Spud" Ely, who used a hammer and crowbar to remove the buttock from the statue, had hoped that a museum would snap the war relic up at the auction in Derby.
But despite attracting global attention, the chunk of mental fell short of its six-figure reserve, reaching a mere STG21,000 ($A31,729.24) at the auction.
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Mr Ely recovered the souvenir of Saddam's downfall while working alongside a TV crew as US Marines toppled the landmark statue in April 2003.
The lot has also been subjected to spectral analysis to allow other pieces of the statue to be authenticated if they come to the market in future.
Part of the proceeds from the sale of the memento had been due to go to charities helping injured and ex-servicemen in Britain and the United States.
Speaking ahead of the auction, Mr Ely said: "There has been interest from around the world and I would love it to go to a museum.
"It's still a tactile piece of bronze, albeit it's the backside of Saddam."
Speaking after today's auction, Charles Hanson, manager of Hansons Auctioneers, said he was disappointed the "piece of modern history" had failed to find a buyer.
