After a lengthy debate, Leicestershire CC education committee rejected the proposal by 17 votes to 16.
The main argument against the present system is that schools are forced to run from mid-August until late December. Educationalists say this can be detrimental to education. Employers, led by the Knitting Industries Federation, said workers regarded the July holiday as sacrosanct, and it fell at a time when cheap package holidays were available. The two week closedown allowed employers to plan and run their businesses efficiently.
Governors and teachers were disappointed by the vote, but Conservative and Liberal Democrat councillors intend to raise the issue again at next month's full county council meeting.
He said many of the arguments put by councillors were to do with social factors in the community, not with education.