A four-year campaign to secure a ".cym" internet address for Wales has been lost to the Cayman Islands in the Caribbean.
DotCYM project leaders in Aberystwyth said it was disappointing, but they still plan to bid for a Welsh version of the .com or .co.uk domain.
They are appealing for new suggestions and said .cymru could be used instead.
An internet expert said it was "more complex" for nations like Wales to secure their own domain names.
The Cayman Islands already has its own internet domain, .ky, but it is also registered to use .cym.
DotCYM was set up in 2006 to campaign for a Welsh internet address name and claims the support of businesses, local authorities and public bodies.
The group has the support of the Welsh Assembly Government, which awarded it a £20,000 grant in 2008.
The Welsh bid follows the successful .cat application from the Catalan linguistic and cultural community.
Following the set back, DotCYM managing director Siôn Jobbins, from Aberystwyth, has asked supporters to come up with new suggestions and has appealed for their views.
Mr Jobbins said the Welsh domain bid would be presented at the "earliest possible opportunity" to Icann, the organisation controlling names on the internet.
"It looks increasingly likely that Icann will open the application process in 2011 so we need to decide on the Welsh domain by the end of this year," he added.
"We'd like to hear the views of people on which domain they'd like to use, for instance .cymru .cwl (Cymru Wales) or .wales.
"We are still going ahead with the bid and that isn't affected. Not being able to use .cym is a shame, but it's not a problem."
Mr Jobbins said after submitting the bid his group would have to wait for up to six months for approval and it could be a year before the domain goes live.
Haydn Blackey, of the University of Glamorgan, who lectures about the internet said: "It's easier for nations recognised by the United Nations to secure these domains, rather than nations, like Wales, which are part of larger countries.
"For Wales to make its own claim (for a domain) makes it's more complex."
He said Icann was likely to process a bid from a country which already had a "distinctive national identity" a lot quicker.