Swiss lawmakers have rejected a draft law that would have enabled the Alpine state’s banks to hand over account data to the US as part of a deal to draw a line under a long-running dispute with the latter country over tax, media reports said.

The Swiss parliament, sitting in Berne, did, however, urge the country’s cabinet to find legal ways of resolving the dispute with the US about handing over confidential information.

For the second time in as many days, the House of Representatives yesterday rejected a government-sponsored bill which would have paved the way for the Swiss banks suspected of helping US citizens to evade taxes. A coalition of the Swiss People’s Party, the centre-right Radical Party and most of the centre-left Social Democrats won the vote with 123 votes against 63 mainly from centrist parties led by the Christian Democrats.

Earlier in the day, the Senate – the other parliamentary chamber – approved the draft law.

Finance Minister Eveline Widmer-Schlumpf has said the government-sponsored bill was designed to let banks end a legal standoff with the US legal authorities. In 2009, UBS settled criminal and civil charges of aiding tax evaders, and Switzerland allowed some account details held at the bank to be passed to the US. The move was seen as a historic breach of secrecy laws. Meanwhile, UBS and a number of other Swiss banks no longer provide offshore banking services to US citizens. One of the most dramatic casualties of the whole saga has been Wegelin, Switzerland’s oldest bank, which has ceased to exist under that name after pleading guilty in the US to adding tax dodgers. The non-Swiss part of Wegelin is now part of the country’s Raiffeisen firm.

Policymakers on both sides of the Atlantic have sought to resolve the issue, with a view to a broad deal that gives protection to Swiss banks in exchange for transferring information under certain conditions.

The US, meanwhile, has passed legislation such as FATCA – the Foreign Account Taxation Compliance Act – designed to crack down on expat US citizens who might be evading taxes. The US pressure on tax evaders and other jurisdictions has drawn accusations of hypocrisy, however. For example, the state of Delaware arguably counts as an offshore tax haven for certain types of client.

In late May, the Swiss government approved legislative moves to allow banks to partly break with long-running secrecy laws and draw a line under a row with the US authorities over tax evasion. “The bill adopted by the Federal Council authorises banks to cooperate with the US authorities and to make available the information necessary to safeguard their interests,” a statement from the government had said.