The move was initially approved by MPs in the Swiss lower house in a vote held three weeks after the Paris attacks of November 2015.
But in a debate on the issue held this week Swiss senators said the wording of the proposal was too vague, and insisted the current legislation was effective.
Current rules allow allows for the stripping of Swiss nationality if a person's “behaviour is a serious threat to Swiss interests or reputation”.
The law dating back to 1953 has never been used. However, a Swiss-Italian teenager suspected of joining terrorists in Syria could have his Swiss nationality withdrawn in what would be the first such case in Switzerland.
According to 20 Minuten the 19-year-old in question is thought to have left his home in Winterthur, in the canton of Zurich, for Syria in February 2015.
He subsequently posted shocking images on the internet, one showing him holding a severed head after a presumed decapitation and another in which he wore combat gear and held a Kalashnikov.
Switzerland's Federal Intelligence Service is currently monitoring some 400 potential jihadists while a dozen people have been hit with terror-related charges in Switzerland in 2016 after returning to the country after allegedly taking party in terrorist activities.
More than 60 possible Jihadists are currently facing prosecution, Swiss attorney general, Michael Lauber said in March.