The attempt to change the rules on who chooses the next Conservative leader has been defeated in a vote of MPs and senior party activists.
Mr Howard is expected to step down in October
A plan to give the choice to MPs rather than Tory members failed to win the two-thirds majority needed for change.
It means the leadership contest will be held under the existing rules, with MPs choosing two candidates to go to a vote of all Conservative members.
That could be prolong the contest until early December at the earliest.
RULES BALLOT RESULT
Overall: 61% in favour of changing rules
MPs: 71% backed the proposal, 26% against
Voluntary activists: 58% wanted rule change, 42% against
Peers/MEPs: 63% wanted rule change, 37% against
The rule change was backed by more than two-thirds of MPs but it won backing from only 58% of voluntary activists in the 1,141-strong constitutional college.
Tuesday's vote will come as a blow to current leader Michael Howard who had backed a change in the rules.
Mr Howard is expected to step down as leader after next week's Conservative Party conference.
The Tory leader said he was disappointed by the result.
"I thought it would be sensible for us to change the rules and a majority of the party agreed with me but not enough of them," said Mr Howard.
"So we will have an election now for my successor under the existing rules. And it will take a bit longer, but that's all the difference that it makes."
Tory chairman Francis Maude said he hoped the new leader would be in place by December.
Critics of the current rules - which have only been used to elect Iain Duncan Smith - say they mean a leader can be chosen without having the support of most MPs.
But Mr Maude said he did not expect a return to the "backstabbing" once the new leader was elected.
The result was immediately lampooned by Liberal Democrat parliamentary party chairman Paul Holmes.
He said the vote "shows what a complete shambles the Conservatives are in, and it shows just how out of touch Tory MPs were in the first place that they wanted to deny democracy to their party members".
Possible leadership contenders Liam Fox and Theresa May welcomed the vote.
Dr Fox said: "I do not believe a confident, outward-looking party restricts its franchise."
And Jean Searle, former president of the National Conservative Convention, said the result was "true to democracy".
Leadership hopeful David Cameron said he had been happy for the contest to happen under either set of rules and was glad the party could now move forward.
And ex-Foreign Secretary Sir Malcolm Rifkind said: "The quicker we can accelerate the process the better."
The vote gives new importance to next week's Conservative conference in Blackpool.
All the leadership candidates will try to woo activists in 20-minute speeches from the platform and at fringe meetings.
Ahead of the gathering, David Davis and Mr Cameron are due officially to launch their leadership campaigns.
Rival Ken Clarke will on Wednesday begin a tour of Tory members on Wednesday under the slogan "It's Time to Win".
The former chancellor said: "I will now start my campaign to give the members of the Conservative Party a leader who can take them to government and win at the next election."