The new code, which had been accepted by the Parliamentary Labour Party, would have made MEPs liable to being disciplined for breaching a commitment to "do nothing that brings the party into disrepute".
But at the conclusion of their annual general meeting in Brussels this week, Labour MEPs refused to agree to the changes on the grounds that they were open to too wide an interpretation.
Alex Falconer, the MEP for Mid-Scotland and Fife, said: "We currently have standing orders which serve as a disciplinary code and have worked very well for us for 10 years."
Last month, it emerged that Millbank officials had compiled a "charge sheet" of offences said to have been committed against the party by Hugh Kerr, the left-wing MEP for Essex West and Hertfordshire East.
Among the "misdemeanours" was an allegation that Mr Kerr heckled Tony Blair at a private reception at last year's party conference in Blackpool. The charge sheet further alleged that Mr Kerr heckled Margaret McDonagh, a senior party official.
Labour officials said later that the file on Mr Kerr had been compiled in order to rebut criticisms if the MEP defected to Arthur Scargill's Socialist Labour Party, something he indicated that he might do.
Last night, Mr Kerr said he was delighted by the decision of fellow MEPs to reject the new code of discipline, which was lost on a vote of 23 to 21.
"You would expect those on the left to reject it but there was a group in the centre who thought that the disrepute clause was a bit of a catch- all phrase," he said.
"It could be interpreted into what they want it to mean. People felt it was carrying things a little too far."
Labour sources pointed out that the vote was close and that the AGM had been generally positive. "It's the first time that we've had MEPs working with a Labour government and as a result of the meeting the liaison with the party and the government will improve," said a source in party headquarters.Reuse content