Residents against the Gorsebrook Road development sought legal advice to challenge the decision after it was given the green light last month.
But now a barrister from Landmark Chambers has advised them there is "no grounds" for a review – and it would cost about £50,000 to pursue.
The proposals had come under fire from residents who said it had been a "done deal", something which Wolverhampton Council has denied.
Lesley Stamps, from St Peters Ward Residents Group, said: "It's the end of the road.
"We've spoken with a top barrister who has advised us that there's no grounds for a judicial review.
"We're all a bit gutted because we feel the council has rail-roaded this through, but they will say otherwise.
"We've tried and we've put up as big of a fight as we could in the interests of the community, we've done our best."
The campaign has been supported by businesses and traders in the area, along with Stuart Anderson Wolverhampton South West MP.
But council chiefs said the transit site was needed in order to secure a High Court injunction that protects sites across the city from illegal encampments.
The 48-year-old campaigner said: "They will argue its for the good of the city and we know it had to go somewhere, but it's just not the right site – for travellers, for businesses, and for the locals.
"We've been beaten, but some positives have come out of it – we're a closer community."
About £2,000 raised will be spent by the group on the area, with residents to vote on how it is handed out.
The transit site, off Gorsebrook Road, was given temporary planning permission for a year – starting from the moment travellers are moved onto it – and will need to be renewed.
It will see up to 13 traveller families housed on the transit site for a maximum 14 days at a time.