Cypriot lawmakers have overwhelmingly rejected a draft bill that would have imposed a deeply unpopular levy on bank deposits.
The proposed legislation was rejected with 36 votes against, 19 abstentions, and none in favor.
It had been amended earlier on March 19 to shield small deposit holders from the deposit tax.
Reports say hundreds of protesters outside parliament cheered in jubilation when they heard the result of the vote.
The government needs to raise 5.8 billion euros ($7.5 billion).
In return, the country would receive 10 billion euros ($13 billion) in loans from international lenders to recapitalize banks and prevent the island nation from going bankrupt.
Cyprus will now have to come up with new proposals to raise the money.
Based on reporting by Reuters and dpa