By Imogen Foulkes
BBC correspondent in Geneva
Switzerland has begun to analyse the reasons for Sunday's rejection of laws which would have made it easier for young foreigners - many of them born and raised in Switzerland - to become Swiss.
Local communities still have the final say on citizenship
In a nationwide referendum voters said no to two proposals, aimed at granting automatic citizenship to third-generation immigrants, and making naturalisation less complicated for the second generation.
Many people fear the vote will cause a rift between Swiss nationals and foreigners living in Switzerland. It followed a campaign which was characterised by controversial propaganda from right-wing parties, suggesting any relaxation of the laws would open the floodgates to immigrants.
Switzerland's foreign population currently stands at 1.5 million, around 20% of the total.
The figure is so high partly because gaining nationality is currently difficult. Candidates must typically wait 12 years before applying. Being born in Switzerland carries no right of citizenship.
"This sends a very bad message to young foreigners in this country," said Cecile Buhlmann, a member of parliament for the Green Party.
"It says Switzerland doesn't want them even if they were born here.
"It will create big differences between immigrants and the Swiss, it's bad for our future living together in this country," she added.
But Switzerland's right-wing Swiss People's Party, which campaigned hard against the proposals, said the result simply reflected the concerns of the voters.
Party leaders defended their controversial campaign, which included posters of black hands snatching at Swiss passports, and suggestions that Muslims would soon outnumber Christians in Switzerland.
"We are simply voicing realities that other parties won't," said Aliki Panayides, General Secretary of the Swiss People's Party.
"There's no point sweeping things under the carpet. It's a fact that there are cultural differences which are difficult to overcome.
"In fact there are some cultures which just can't be integrated into the Swiss way of life," she added.
"To be Swiss you have to be truly integrated. That means you're ready to work hard, to defend this country, and to help to make it rich."
The fact that the naturalisation proposals were rejected simply proved that the People's Party had got its message across, she said.
"We simply opened people's eyes to a few things."
"The campaign had nothing to do with racism," she added.
But supporters of eased naturalisation say Switzerland is now left with a system which is inherently unfair.
In French-speaking regions of the country, which supported the proposals, young foreigners born in Switzerland already have a somewhat easier path to citizenship.
But in German-speaking regions, which soundly rejected any relaxation, candidates with any connection to the Balkans or to Africa are regularly rejected - even if they were born in Switzerland and satisfy all the legal requirements for naturalisation.
For these young people, the rejection of the proposals is a bitter blow. Most of them are keen to participate in the country which is their home, but they do not have the right to vote because they are not Swiss.
Fatma Karademir, who has Turkish nationality despite living all of her 23 years in Switzerland, had hoped for a quicker route to Swiss citizenship.
"I'm absolutely shocked by this vote," she said. "It's not just bad for the foreigners, it's bad for the Swiss state. I really feel as if the Swiss don't want us."
Andreas Lehner, who has a Greek father and a Swiss mother, shared the frustration.
"I'm very sad about this vote," he said.
"If it wasn't for my mother I would find it very difficult to get citizenship, and quite frankly I'm not sure how long I could live in a country which denied me my political rights."
But Switzerland's young foreign population will have to be patient. Changing the naturalisation laws is likely to be off the political agenda for at least 10 years.
Meanwhile the Swiss People's Party, buoyed by its success in this vote, says it will push for further restrictions, including a ban on holding dual nationality.
If that were to succeed, it could affect hundreds of thousands of Swiss citizens, many of whom also still share the nationality of their immigrant fathers and grandfathers.