The world No 78, who also reached the last 16 of the Irish Open in Dublin a month ago, was beaten 5-4 by Finland's Robin Hull, who potted the pink and black in the deciding frame to go through to the second phase of qualifying which starts on Sunday. Couch, up to 35 in the provisional rankings, led 2-1 and 4-3 but Hull, the world No 104, snatched a late victory after forcing the decider with a break of 62.
Hull, whose father owns a snooker club in Helsinki, was also responsible for the highest break of the match, an 80, to lead 3-2.
Tony Knowles' hopes of making further progress were dashed when the 43- year-old from Bolton was beaten 5-1 by Alfie Burden, who fired in breaks of 105 and 66.
Another casualty was the Canadian Bob Chaperon. He lost 5-3 to Marcus Campbell, the player who whitewashed Stephen Hendry 9-0 in the first round of the UK Championship in November.
Fellow Canadian Kirk Stevens has now officially withdrawn from the British Open qualifying competition, which starts today. He is still stranded on the snowbound eastern seaboard of Canada.
Dennis Taylor, who retires at the end of the season, is hoping to bow out by guiding his northern Ireland side to victory in the inaugural five-team Nations Cup, being staged at the Telewest Arena in Newcastle, from 16 to 24 January.