Sanders had spent much of the past year mulling a bid for the U.S. Senate seat held by Sen. James Jeffords, R-Vt. Polling showed the two popular politicians in a virtual tie.
Sanders, an independent who aligns himself with the Democrats, said the decision was a tough one, but in the end he decided he could best serve Vermont and fight for the issues he cared about if he remained in the House.
"I happen to think that at this particular moment in history, the House of Representatives is a more progressive and people-oriented institution than the Senate, and that I can play a better role in the fight for social justice in the House," said Sanders.
Sanders' decision to remain in the House is a victory for House Minority Leader Richard Gephardt, D-Mo., who is working hard to win back control of the House from the Republicans, and has promised Sanders a seat on the House Appropriations Committee if the Democrats regain the majority.
At present, the GOP holds a 223-211 edge in the House.
Sanders said that he was truly torn between running for the Senate and running for re-election, and that Gephardt's commitment to give him a seat on the Appropriations Committee clinched the decision for him.
Sanders, who has served in the House since 1991, is virtually assured of re-election. Had he given up the House seat, Republican James Douglas, now the state treasurer, was given the early edge in gaining Sanders' open seat. Douglas does not plan to challenge Sanders.
Sanders' announcement at a press conference Monday ends a year of intense lobbying by Democratic leaders in the House and Senate to win over the popular politician.