Wednesday's announcement also came hours after European Union election monitors said they were pulling out of Sudan's war-torn western region of Darfur, citing security concerns.
Veronique de Keyser, the head of the EU mission, said safety limitations meant it would be impossible to monitor the vote "in a credible way".
Sudan's first nationwide elections in almost a quarter of a century have been scheduled to take place between April 11 and 13.
Umma was among a group of opposition parties that had given the Sudanese government until April 6 to implement reforms in return for a pledge to take part in elections that would then be pushed back to May.
"The political bureau discussed the issue over the past two days," Nugdalla said.
"Several points of view were heard. In the end, we came to the conclusion that our conditions for postponing the elections had not been accepted."
Umma had won the previous legislative elections in 1986, only to be removed from power later by Sudan's current president, Omar al-Bashir.
The presidential, legislative and local elections are seen as a prelude to a referendum on independence for southern Sudan that is scheduled for January 2011.
But the former southern rebel SPLM said on Tuesday that it was extending its boycott of the election to include the northern states including Darfur.
It still plans to field candidates in the sensitive border states of Blue Nile and South Kordofan, where it enjoys support.
Sadek al-Mahdi, Umma's leader and a former prime minister, met on Wednesday with Pagan Amum, the SPLM secretary-general, before the party's decision to boycott the elections was announced.
Vote to go ahead
|The government says it will continue with the scheduled polls beginning on Sunday [EPA]
Meanwhile, the Democratic Unionist Party, which came second to Umma in the 1986 contest, said on Tuesday it would present Hatim al-Sir as presidential candidate, after an initial decision to boycott the poll.
On Tuesday, Sudan's election commision said that the vote would go ahead, while about 50 people protested outside its offices demanding "free and fair" elections.
The Umma party and the DUP took first and second place respectively in the last elections in 1986.
Al-Bashir then took power in a military coup three years later.
Sudan has suffered two civil wars between the north and south of the country over the past five decades, in addition to the bloody conflict in Darfur.