The punk musician was in line to become the group's guitarist after original band member Ron Asheton passed away last year but stepped aside when James Williamson - who originally took the musician's place to play on the band's final album 'Raw Power' album in 1974 - said he'd like to perform on the tour.
Steve told US radio host Eric Blair: "I was going to go on the road with Iggy Pop, but James Williamson wanted to do this album, 'Raw Power', so you might as well have him, have the real deal doing it, rather than having me try and fumble my way through."
The musician also admitted he would consider returning to the Sex Pistols - if he needed some money.
When asked if he would ever reform the punk legends again, he replied: "Probably, if I need a new kitchen."
He also gave condolences for his band's stylist and manager Malcolm McLaren, who unexpectedly passed away in April.
Steve said: "I was upset. I was really upset. As much as I've really put the boot in with him, saying he stole all the money and everything, he was a good bloke. It's sad, it's a real shame."