The initiative had prompted heated discussions among politicians. The Cabinet adopted the decision on its third attempt.
The government says in its opinion that enforcing such a ban would require disproportionately high financial and human resources.
The Interior Ministry, which drafted the opinion, notes that even if smoking on balconies were banned, smoke could drift into other apartments through open windows or air ducts.
"We are calling for more effort to increase people's awareness of the harms of smoking," Interior Minister Eimutis Misiunas told the Cabinet.
The proposed amendments to the Law on Tobacco Control have been supported by Health Minister Aurelijus Veryga and 13 other MPs.
The negative opinion from the government does not oblige parliamentarians to vote against the amendments.
Since 2014, the Seimas has rejected several moves to ban smoking on balconies. Opponents say such a ban would not be enforceable.