A motion urging the Education Minister to create 1,000 extra places at the University of Ulster's Magee campus in Derry has been defeated at the Assembly.
49 MLAs voted against while 27 were in favour.
The expansion of the campus has been described as a potential catalyst for citywide economic renewal.
Employment Minister Stephen Farry has said the 600 extra student places secured for next year had to be shared, but indicated Mc Gee would get a substantial number of them.
In a statement this morning, the campaign group U4D says the the rejection of the motion must not deter the campaign for the larger expansion of Magee, or for the full adoption of the One Plan regeneration proposal for the city.