Orban and his ruling Fidesz party had introduced the anti-migrant bill in response to the European Union resettlement plan and a specific EU quota to allow a reported 1,294 refugees to relocate to Hungary.
But radical right-wing Jobbik party politicians boycotted the vote Tuesday, leaving the proposed constitutional amendment short of the required two-thirds majority, Balint Gyorgy, deputy head of the parliament press office, told CNN.
Marton Gyongyosi, a Jobbik member of parliament, told CNN that his party -- which would normally have voted to back the amendment -- abstained from the vote because of a 2012 government initiative that essentially equates to a cash-for-residency scheme.
Jobbik firmly opposes these so-called "government bonds," which party members say are sold to foreigners who can prove they have €300,000 (just over $331,000) or more. These foreigners are then given residency in Hungary.
Gyongyosi said that so far, more than 7,000 such bonds had been sold.
"We have said that of course we are against the resettlements to Hungary by Brussels and we are against migration quotas, but we are equally against migrants to Hungary who perhaps have €300,000 to spend," Gyongyosi said. "If you want to say 'No' to poor ones, you have to say 'No' to rich migrants.
"The reason why we did not press the 'no' button is only up to the fact that the government has created the loophole through which it can sell out residency through money," he added.
The result of Tuesday's vote will be a blow for the Fidesz party and Orban, who has vowed
to defend Hungary from forced migration policies from the European Union.
"The vote today demonstrated that for all opposition parties, especially for Jobbik, the issue of national sovereignty and the struggle against compulsory quota proposed by the European Commission comes only after their party-political considerations," said Zoltan Kovacs, spokesman for the Hungarian government, in an email to CNN.
"For us, retaining elements of national sovereignty that have never been handed over to any European institution is and should be a national cause, a 'national minimum' if you like, that cannot be sacrificed for any political consideration."
He added that Fidesz will make a decision on further steps later Tuesday, including the possibility of resubmitting the constitutional amendment again in the future.
In October, Hungarians voted on the issue of EU quotas in a referendum, overwhelmingly rejecting them. But low voter turnout (43.7%) meant the result was not legally binding.
"Can a democratic community [the EU] force its will to a member where 92% [of the voters] is against it? I promise, I will do everything so this can never ever happen," Orban said last month.