The scheme by Juan Jose Ibarretxe would have seen the substantial autonomy the wealthy northern region already enjoys from Madrid upgraded to "free association" status.

Out of a total of 344 votes cast on Tuesday, 313 deputies voted against the plan, with 29 for and two abstentions.

The Basque regional assembly last month adopted the project, which would give the region its own legal system and representation abroad in organisations including the European Union.

Threat to cohesion

But Spain's mainstream parties in Madrid see this as a threat to the country's cohesion and fear Ibarretxe's plan could presage similar claims by other regions, particularly Catalonia.

During the debate, Spanish Prime Minister Jose Luis Rodriguez Zapatero rejected the plan, saying in reply to Ibarretxe: "This is the seat of democratic Spanish sovereignty, of each - and every one - of the regions.

"All Basques ... and all Spaniards will decide the relationship between the Basque country and the rest of Spain."

Separatist  violence

Ibarretxe had urged lawmakers in the national parliament not to spurn a "historic opportunity" to resolve relations between Madrid and the Basque country, poisoned for four decades by separatist violence fomented by armed group ETA, which is blamed for more than 800 deaths.  

"I believe in dialogue - this is why I came here - not to confront Madrid"

Juan Jose Ibarretxe,
Basque leader

"Don't spurn the historic opportunity which we have in front of us," said Ibarretxe, who insisted he had come "hands outstretched to open a process of negotiation" with Madrid.

"I believe in dialogue - this is why I came here - not to confront Madrid," he said.

Limited autonomy

Existing autonomy in its current incarnation was afforded Spain's 17 autonomous regions four years after the death of military dictator General Francisco Franco, with the passing in 1979 of the Statute of Autonomy, known as the Statute of Guernica.

The Basque region had enjoyed limited self-government based on its own laws from the Middle Ages but under Franco autonomous tendencies in the region and elsewhere were brutally suppressed.

Before Madrid's "no" vote, Ibarretxe said in reply to speeches by mainstream party leaders that he would press ahead with plans for a referendum in the Basque country on his autonomy scheme, regardless of whether parliament in Madrid rejected it.