Pro-government lawmakers walked out of the council chamber moments before the vote was to take place.
The reforms would have given China the right to vet candidates in the election of the territory’s leader.
The divisive plan sparked mass protests with pro-democracy activists labelling it “fake democracy”.
After the pro-China legislators walked out of the chamber, the 37 lawmakers left voted and the motion was rejected with 28 opposing it and eight supporting it. It needed at least 47 votes to pass.
It means Hong Kong’s next chief executive will be selected, as before, by a 1,200-member committee, that is currently stacked with Beijing loyalists.
How it all unravelled for pro-Beijing side: Juliana Liu, BBC News, Hong Kong
The outcome was expected, but the circumstances surprisingly dramatic.
When government officials gave their final speeches, it was hours ahead of schedule. Journalists scrambled to retake their seats in the main chamber at the Legislative Council.
Then a bell rang, reminding lawmakers to gather to vote. The cavernous room echoed with tension. A voiced called out, asking to halt the proceedings with just minutes to spare. The head of the council declined. Pro-government legislators walked out in protest.
As a result, the controversial government reform plan failed by a wide margin.
Maggoty apples and Hamlet: How Hong Kong’s passionate debate unfolded
It was a confusing scene with some lawmakers unsure as to why others had walked out.
“We have no idea what happened with the rest of the group suddenly deciding to leave the chamber,” said James Tien of the pro-government Liberal Party. “We decided to stay put and vote for the bill.”
Later, some of the pro-Beijing lawmakers blamed miscommunication after their request for a 15-minute suspension was rejected by the Speaker.
Democratic Party lawmaker Emily Lau called the walkout “farcical”, according to Reuters news agency.
“Those people who were not present in the chamber were supposed to be assisting in running Hong Kong, but if you look at their farcical behaviour you can’t help feel sorry for Hong Kong,” she said.
The package would have granted all Hong Kong citizens the right to vote for their chief executive for the first time in 2017, but they would only be able to vote for candidates that had been vetted by a pro-Beijing committee.
The bill’s defeat comes after what has been a tense year of political debate in the former British colony that was handed over to Beijing in 1997.
In September last year, activists began occupying major parts of the city and demanding universal suffrage. Protests paralysed the city centre after clashes between police and activists saw tear gas deployed.
After more than two months and with no concessions from Chief Executive CY Leung, the protest camps were ultimately dismantled by police.[SOURCE- “bbcnews.com”]