The new enquiry - which the centre left promised in its 2006 election platform - was to have focused on a police raid which took place on July 21, 2001, when 150 police in riot gear burst into a school where anti-globalisation protestors were quartered.
Police arrested 93 protesters including British, French, German and other non-Italian nationals. Sixty of the protestors had to be taken to hospital after the raid and three people were left comatose, including a freelance British journalist, Marc Covell.
A trial into the Diaz school case, in which 29 police officers are defendants, began in April 2005 and is still going on.
In June this year a top policeman changed his earlier testimony and said he had witnessed police brutality during the raid on the Diaz school. He called the scene when he arrived there "carnage".
Centre-right MPs welcomed the vote against a new enquiry saying an attempt by "ultraleftists" to put the police on trial had been thwarted.
The SAP police union said the vote had "done Italy a great service".
The Italy of Values party, one of the two centrist parties which voted with the opposition, said it had done so because the enquiry envisaged would have been "one-sided", ignoring violence committed by protestors.
Oliviero Diliberto, whose Italian Communists' Party had pushed hard for the new enquiry, said it was shocking that allies did not want to "find the truth about something that ended one life and bloodied the streets of Genoa".
More than 300,000 demonstrators converged on Genoa for the G8 summit.
During two days of subsequent mayhem, one protestor was shot dead while attacking a Carabinieri policeman, shops and businesses were ransacked and hundreds of people injured in clashes between police and demonstrators.
According to protesters inside the Diaz school, they were brutally attacked by the police for no reason.
The police instead maintain that the protesters were harbouring dangerous weapons and resisting arrest and that they were forced to defend themselves.
All charges against the demonstrators were subsequently dropped while the police stand accused of planting evidence against them including two molotov cocktails and falsely accusing them of violence.
In a separate strand of the trial, judges are soon to reach their verdict on 25 protestors accused of causing mayhem and destroying property during the Genoa summit.
Last week, a lawyer acting for the state asked for a total of 2.5 million euros in damages for the stain on the national image and urged the court to hand down prison sentences totalling 225 years.
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