Measures to help save dolphins off the region's coast have been blocked by the European Commission.
The Commission has rejected UK evidence
The government put in a request for a ban on pair trawling for sea bass which has been linked to dolphin deaths, but the request was rejected.
The Commission said the scientific data presented by the government to support the request did not justify an immediate ban.
Campaigners are warning the UK dolphin population could be wiped out.
Environmental group Greenpeace estimates that about 10,000 dolphins and porpoises die annually around UK and French coasts, many of them after being caught up in bass nets.
Figures for 2002-2003 show 250 cetacean carcasses were found dead on beaches in Cornwall, while 80 were washed up on Devon's shores.
The British request for a ban was made by fisheries minister, Exeter MP Ben Bradshaw.
The Commission said that while acknowledging the considerable efforts made in the UK in trying to find a solution to dolphin bycatch, it did not consider the data submitted was sufficient to justify an immediate ban.
The Commission's decision has provoked anger and disappointment in Devon and Cornwall.
Ruth Williams from the Cornwall Wildlife Trust said: "If the numbers keep declining it will reach a point where they're not sustainable.
"We were hopeful the evidence would be sufficient to impose a ban, but realistically there's a lot of pressure from other member states and that's the problem with this."
Dolphins are being washed up on Devon and Cornwall beaches
Ms Williams said other possible solutions such as separation grids and pingers could help, but it would take time to make improvements and build them up.
She said: "That's why we need an emergency ban now, because the dolphins don't have time.
"We hope Ben Bradshaw will put some of his alternative plans into action.
"A UK ban in territorial waters isn't the answer, but it can help and it will show Europe that we're serious about this problem and leading by example."
South West MPs have also reacted strongly to the Commission's decision.
Candy Atherton, Labour MP for Falmouth and Camborne, said she was bitterly disappointed.
"I think the evidence is overwhelming. We've seen it with our own eyes on our beaches in Devon and Cornwall.
"I dread this time of year with the start of the sea bass fishing and the slaughter of our dolphins and porpoise population.
"It's absolutely dreadful and there will be real dismay right across Europe about this."