The Italian striker was charged following an incident in Sunday's 3-2 Premier League victory against Tottenham when he appeared to stamp on Scott Parker's head with his boot.
He escaped punishment at the time but Howard Webb later informed the FA he would have sent Balotelli off if he had seen the incident.
The FA confirmed the outcome shortly after Wednesday's 6pm deadline to submit an appeal, and that meant City boss Roberto Mancini was unable to call on one of his key men at Anfield.
"I do not agree with this decision, but we can do nothing," Mancini told Sky Sports 1 ahead of kick-off. "I do not agree.
"I explained to Mario and he understood."
In addition to Wednesday night's game, Balotelli will also miss the Premier League encounters with Everton, Fulham and Aston Villa.
However, the 21-year-old striker would be available for the Carling Cup final against Cardiff at Wembley on Sunday, February 26 should City overturn their one-goal deficit against Liverpool.
It was no surprise that City chose not to appeal, with assistant manager David Platt hinting at that course of action on Tuesday, although it is believed City officials debated long and hard about it as they are still not entirely convinced referee Howard Webb failed to spot the original incident last weekend.
Even so, it would be a difficult case to argue given Webb states otherwise and there was a possibility the ban could be extended for a frivolous appeal.
It is unlikely to sit well with Balotelli, though.
On Tuesday, his agent Mino Raiola accused Webb of being a "coward", and added: "If the English don't start to protect Mario a little bit more, we will have to look at other alternatives and leave the UK."
