But there is a light at the end of the tunnel for the 62-year-old singer.
Authorities have come up with a compromise that would allow him to raise HIV-positive Lev in the UK, but which would also involve the little boy's mother who would retain her parental rights.
On Thursday Yuri Pavlenko - Ukraine's family, youth and sports minister who initially revealed Elton would not be able to adopt because of his age and sexuality - indicated a change of heart.
He said that the English singer "has the right and opportunity to invite the family of this boy to visit him, take them under his guardianship and help him grow into a good person".
He added that adoption was still not possible because Lev's mother is alive.
"I'd like to ask everyone to be tolerant to this boy. This is not an orphan, the child has a mother and an elder brother and so he cannot be adopted by law," he said.
"He has a difficult fate, like his mother. Help has been provided to his mother to find strength to bring the family back together."
The new proposal would mean Lev's mother would be encouraged to visit Elton in Britain with both of her two sons.
"It would be entirely up to the mother if she agreed to this arrangement," a source in Kiev told the Mail.
"It could allow her to stay involved in their upbringing under Elton's guidance."