Search and rescue teams failed repeatedly in recent days to lift the main body of the Airbus A320-200, where officials had hoped to find the majority of the victims.
The navy, which has provided much of the personnel and equipment for the rescue effort, said yesterday that it was withdrawing as the badly damaged fuselage was too difficult to lift and no more bodies had been located.
"All of our forces are being pulled out," said Rear Admiral Widodo, a navy official overseeing the search and rescue operation. "We apologise to the families of the victims."
So far only 70 bodies have been recovered, and the national search and rescue agency said it would try to find more victims in smaller-scale operations.
"We will continue to try fulfil the hopes of the victims' relatives, but the operation will not be a large-scale one," the agency's head Bambang Soelistyo told AFP.
Military spokesman Fuad Basya said that the plane's body was "destroyed".
"It was soaked in sea water for a while so when we lifted it it was torn apart," he said. "We can no longer find any more bodies."
Despite the military's withdrawal from the operation, Shukor Yusof, founder of aviation research firm Endau Analytics, said it would be surprising if authorities did not continue to salvage the aircraft.
"I think it would be very surprising if the salvage was not continued, knowing in fact that it's there," he told AFP.
"I can't think of any previous aircraft incidents where they haven't tried to retrieve everything."