Umaru Yar'Adua pledged reforms after winning "flawed" elections
Nigeria's cabinet has rejected reforms that would have empowered the judiciary to pick the chairman and board members of the electoral commission.
President Umaru Yar'Adua's cabinet insisted he should retain those powers.
Democracy activists called the decision a U-turn and said it raised fears for the fairness of the next federal elections, due to be held in 2011.
At the same time the commission will be revamped to allow the participation of the media and civil society groups.
President Yar'Adua promised to reform the electoral process following his election in 2007.
Most observers said those polls were characterised by vote rigging, voter intimidation and ballot-box stuffing.
A panel led by former Chief Justice Mohammed Lawal Uwais had recommended the presidency be stripped of the power to appoint the head of the country's election regulator.
But Information Minister Dora Akunyili said on Wednesday the "separation of powers" prevented the executive from relinquishing the power to appoint the head of the Independent National Electoral Commission (Inec).
Emmanuel Ezeazu, of the Alliance for Credible Elections, said there would be a "terrible effect" on democracy if the head of Inec continued to be appointed by the president.
"During the last elections Inec acted as an extension of the People's Democratic Party," he said.
The result of the 2007 election was announced by Inec chairman Maurice Iwu, hours before all the votes had been counted, according to opposition party members.
It was the first time a civilian government handed over to another since the country emerged from years of military rule in 1999.