However the stock recovered in late trading and ended down just 0.25p at 208p.

The proposal has created a storm of protest from UK investors and the decision is an embarrassment to the car component company's management, lead by chief executive Victor Rice.

However LucasVarity has backed Mr Rice to continue in his role despite the disappointing result.

The proposal had required a 75% approval. But after an extraordinary general meeting in central London on Friday, only 73.9% of the shareholders voted in favour of the move.

The result of the vote had been delayed after protests from opponents of the initiative.

In a stormy meeting to decide the company's fate shareholders accused the LucasVarity board of "manipulation and greed."

There had been claims that directors wanted to move the stock market listing to secure the larger pay packets that are available in the US.

All of the 120 or so shareholders at the meeting voted overwhelmingly against the proposal.

The UK engineering firm, which merged with US-based Varity in 1996, argued the move would have made it easier for the company to raise capital.

Chairman Ed Wallis in a statement thanked the shareholders who supported the proposal.

"The board is committed to the company's strategy to maintain and strengthen its leadership position in its core businesses that offer attractive growth opportunities, and is confident of the management's ability to achieve these objectives. It's business as usual," said Mr Wallis.

Old UK company

Workers worried about jobs

Lucas is one of the oldest names in the UK engineering industry, with a 100 year old history and 24,000 employees in Britain.

As well as brakes and other automotive parts, it also produces components for the aircraft industry.

It is one of the City's top companies, listed in the FTSE 100 index, and its departure from the London stock market would mean institutions having to rebalance their portfolios.