The vote took place after more than 100 impassioned speeches both for and against the measure -- the most controversial decision in the 20 years since the Anglican church voted to allow women priests. The measure enjoyed solid support among lay people and bishops, but fell just short of the two-thirds majority church rules require to make the change.
It prompted one bishop who favored the measure to wonder whether the Church of England had become a "national embarrassment," The Guardian of England reported.
The decision comes as a particularly difficult blow for Rowan Williams, the outgoing Archbishop of Canterbury, who had campaigned personally in support of female bishops.
"Of course I hoped and prayed that this particular business would be at another stage before I left, and of course it is a personal sadness, a deep personal sadness, that that is not the case," he said.
The matter cannot be brought to a vote for another three years. The legislation allowed churches opposed to a female bishop to request a separate male bishop to govern their affairs, but conservatives shrugged off the compromise, saying male bishops could still be subjugated to female bishops in the church's hierarchy.
When put to a non-binding vote of members in the Anglican church's 44 diocese, 42 approved of allowing women to reach leadership roles.