The Local Government Commission has not accepted a proposal by residents of Waihi Beach ward in the Western Bay of Plenty district to transfer to the Hauraki district.
Almost 1000 people, or about a third of the eligible voters in Waihi Beach, supported the petition for change.
But the commission says the transfer would not be in the best interest of either district.
Petition organiser Brian Hepenstall says the decision is disappointing.
Under LGC rules, another proposal can be lodged in three years.