MPs have rejected an attempt to force shops, supermarkets and anywhere serving food to clearly label products containing halal or kosher meat.
Conservative Philip Davies, who proposed the Commons debate, said there was a "huge public demand" to know more about where food came from.
But consumer affairs minister Jenny Willott said the government did not think regulation was the best approach.
Halal and kosher are terms describing foods permissible for Muslims and Jews.
Mr Davies' amendment to the Consumer Rights Bill failed by 264 votes.
'What customers want'
The prime minister's spokesman said last week that the government would review the labelling of halal meat if the food industry did not take action.
This followed five leading supermarkets saying that some of the meat they sell could qualify as halal but is not labelled as such.
Marks and Spencer, Tesco, Waitrose, Morrisons and the Co-op said their New Zealand lamb was halal, while Pizza Express had already revealed its chicken is killed according to Islamic tradition.
The supermarkets said the animals were stunned before being killed and the only difference from standard meat was that they were blessed as they are killed.
Speaking in the Commons, Mr Davies, who worked for Asda for 12 years, argued that ministers needed to go further now, saying: "As a strong believer in freedom of choice, I think one of the fundamental rights of the consumer is to know what they're purchasing."
He added the supermarkets "should be delivering what their customers want and there's no doubt this is what customers want to see."
Mr Davies said compulsory labelling would cover schools and hospitals.
He quoted at length a Daily Mail article by Taj Hargey, director of the Muslim Educational Centre of Oxford, who said halal meat was "covert religious extremism and creeping Islamic fundamentalism making its way into Britain by the backdoor".
But Labour MP Yasmin Qureshi said: "I am a bit concerned about the way this debate on halal and kosher has been taking place in the country and also some of the things said in the chamber as well.
"At the heart of this debate is the suggestion that somehow halal and kosher meat is actually more painful for the animal... as opposed to the stunning method, even though we know 90% of the meat in this country is stunned anyway."
'Picking on religious'
Conservative Jonathan Djanogly questioned whether Mr Davies felt it was wrong to concentrate on religious slaughter with his proposal.
He asked him: "I support further labelling, but do you not think it's wrong just to look at religious slaughter in isolation from other forms of slaughter... indeed labelling on how the animals actually lived in terms of housing, food and the drug consumption that they've had.
"Why are you just picking on religious communities with your amendment?"
For the government, Ms Willott said: "We want people to have the information they need to make informed choices about the food they buy. Many retailers or restaurants and fast food outlets already voluntarily provide information on whether meat is halal or kosher.
"This is a complex and very sensitive area. There is no single clear definition of halal meat."
Mr Davies' plan was rejected by 281 votes to 17.