The League One side sacked Dean Holden on Sunday after a calamitous start to the season.
Charlton are on the hunt for a new manager to take over and several potential candidates have been linked with the role at the Valley.
The Addicks wanted Powell to return to the club in an interim capacity however and made an approach to him at the weekend.
Powell, who is a familiar face at the Valley, turned down the offer to become the interim manager of the London side.
He decided to do so as he thought it was not the right time to take the post.
Powell guided the Addicks to the League One title during the 2011/12 campaign and the London side hoped that their former boss would be able to help them this season.
Charlton are now looking elsewhere and it remains to be seen if they still want an interim boss or a permanent appointment.
