Turkish President Ahmet Necdet Sezer has vetoed a set of constitutional changes that would have let the public elect the country's head of state.
Under Turkish law, Mr Sezer cannot veto the same reform twice
The amendment was prompted after secular opposition lawmakers boycotted a vote to elect the Islamist-rooted ruling party's candidate, Abdullah Gul.
Mr Gul, the foreign minister, withdrew his candidacy and the government called early general elections for 22 July.
Under the current system, the president is elected by parliament.
It was widely expected that Mr Sezer would reject the package of reforms.
In a statement, the secularist president said there was "no justifiable and acceptable reason or necessity" for the amendment.
He said the changes could threaten Turkey's democratic system as a president elected by popular vote could further challenge parliament, which is also directly elected.
"In the parliamentary system, these broad powers envisaged to achieve a balance of power could produce results which are troublesome for the regime ... if the president is chosen by the people," Mr Sezer said.
Prime Minister Recep Tayyip Erdogan has indicated that his government will try to push the reform through parliament again unchanged.
But Mr Sezer cannot veto the same bill twice. He would either have to approve the law or call a referendum.
The reforms included a proposal letting the public elect a president for a five-year term that could be renewed once.
Currently, parliament elects Turkey's president for one non-renewable seven-year term.
The political crisis was sparked when the ruling Justice and Development Party (AK Party) tried to nominate Mr Gul, whom opposition parties accuse of having a hidden Islamist agenda, to the presidency.
There have been mass rallies across the country since the failed election, earlier this month. Turkey's military has also stepped in, warning that it would intervene to defend secular rule.
Despite the rallies, correspondents and opinion polls indicate that the AK Party still remains the country's most popular.