The Council of States on Wednesday rejected attempts to introduce a federal ban by 24 votes to 4.
Supporters of the ban had denied that their main target was Muslim women, saying that they were most concerned with preventing criminals from disguising their identities, citing the examples of burglars and football hooligans.
"Above all, it's a matter of national security," said Maximilian Reimann of the conservative Swiss People's Party, according to the 24 Heures newspaper.
Those opposed to the ban argued that authorities in many cantons already had the right to demand that demonstrators remove face coverings. The police could ask anyone to show their face if necessary for identification purposes. They also said that very few women in Switzerland wore Islamic face coverings.
Ban opponents also said that federal legislation would impinge on the rights of the cantons and would require a constitutional amendment. A number of cantons have already introduced burqa bans. A further five cantons have voted on the issue and rejected a ban.
The lower house of parliament, the National Council, has not yet voted on the ban proposal.
France will introduce a ban on wearing facial coverings in public on April 11th.