MPs have rejected a draft EU directive aimed at increasing the number of women on company boards.
The directive would oblige firms listed on stock exchanges to reserve at least 40% of their non-executive director board seats for women by 2020.
The European Commission's plans need approval from the European Parliament and Council of Ministers.
As MPs debated the proposals on 7 January 2013, Business Minister Matthew Hancock said the government did not believe the directive complied with the EU principle of subsidiarity - that decisions should be made at a national level if possible.
Mr Hancock said the government backed a voluntary approach and dismissed the need for the EU to set a target.
Chuka Umunna, Labour's shadow business minister, said female representation at boardroom level was "woefully low".
He conceded that the previous Labour government did not do enough to address the matter when it was in power.
But he feared that the stance taken by ministers made it appear the government was "dragging its feet" when it came to equality issues.
Labour MP Keith Vaz said the numbers of ethnic minorities sitting on company boards also need to be increased.
Mr Umunna also criticised the government for the lack of females in the Cabinet, telling MPs that only 18% of posts were filled by women.
At the end of the debate, MPs agreed the motion stating that the EU directive "does not comply with the principle of subsidiarity", without a vote.