"The project to amend the constitution has been rejected and archived unanimously with one abstention," Chamber of Deputies speaker Hugo Velazquez told reporters after the vote.
The draft prompted protesters to set fire to the parliament. Police used rubber bullets to disperse the crowds, and one activist was killed.
Horacio Cartes, who assumed the office in 2013, said last week he would not stand for president in 2018, whatever the deputies’ decision, in a bid to restore peace in the country. The current law limits his time in office to five years.