Overextended, available supplies now dwindling, pinned down by the Allied artillery in the pass in front of Thala and now facing US counterattacks along the Hatab River, Rommel realised his attack had been stopped. At Sbiba, along the Hatab River and now at Thala, the efforts of the German and Italian forces had failed to make a decisive break in the Allied line. With little prospect of further success, Rommel judged that it would be wiser to break off to concentrate in South Tunisia and strike a blow at 8th Army, catching them off balance while still assembling its forces. He at least had the consolations that he had inflicted heavy losses on his enemy and that the Allied concentrations in the Gafsa - Sbeitla area had been destroyed.
At a meeting at Rommel's Kasserine HQ on February 23 Albert Kesselring and his Chief of Staff Siegfried Westphal tried to change Rommel's mind, arguing that there were still possibilities for success. However, Rommel was adamant; Kesselring finally agreed and formal orders from the Comando Supremo in Rome were issued that evening calling off the offensive and directing all Axis units to return to their start positions.
On February 23 a massive U.S. air attack on the pass hastened the German retreat, and by late on February 24, the pass had been reoccupied and Feriana was in Allied hands. Sidi Bou Zid and Sbeitla followed soon after.