International efforts to bail out Cyprus' debt-laden economy have been thrown into doubt after its parliament rejected a key part of the plan.
As part of the 10bn-euro (£8.25bn; $13.7bn) deal with the EU and International Monetary Fund, lawmakers have until 5 March to pass a bill allowing state firms to be privatised.
But on Thursday, they threw it out, jeopardising the next tranche of cash.
The government says it will re-submit the bill with some amendments.
The deal was agreed in March last year in an attempt to stave off the collapse of Cyprus's banking sector and the wider economy.
It included moves to restructure the banks, along with other measures such as tax rises and privatisations.
Late on Thursday, the privatisation bill was narrowly defeated after parliament split 25-25 on the vote, with five abstentions. This meant the legislation failed to pass.
The vote took place as hundreds of people opposed to privatisation staged a protest outside the parliament building.
A government spokesman, Christos Stylanides, said the bill would be amended to reflect concerns over workers' rights after privatisation.
He said the new version would be submitted to the House of Representatives on Friday.
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