A college in the West Bank will not be given university status after an Israeli government-funded committee voted against the move.
Campaigners had pushed for Ariel College to be upgraded, but members of Israel's Council of Higher Education blocked this.
Had the college's status been changed, it would have been seen as a victory for supporters of the settlements. But the controversial decision would have earned condemnations from the Palestinians and many in the international community.
Council members said they based their decision on academic considerations rather than political ones, arguing that Israel should not have another university when others in the country were facing shortages in funding for staff and infrastructure.
Ariel is one of the largest of the West Bank settlements.