But the row will now move to the Kirk's Edinburgh presbytery, which is expected to issue an ultimatum to Mr Munro that he must stop living in his own house and move into the manse in Braid Crescent, Morningside, or face disciplinary action, including the possibility of the sack.
Mr Munro and his wife lived in the eight-roomed manse for five years, but she never liked the house and two years ago they bought their own property in the Braids.
Mr Munro still uses the manse every day as an office and an American assistant minister is living there as a guest. But the presbytery claims the arrangement breaches Church of Scotland rules.
When the case came before the Commission of Assembly, held at St Cuthbert's Parish Church yesterday, the ministers and elders voted 64 to five for the presbytery and against Mr Munro.
Mr Munro said he was not surprised by the result. "It's very difficult to persuade the church to overturn the status quo," he said.
"A lot of people came up to me afterwards and said I'd won the argument even though I lost the vote."
A key part of the case was a disagreement over the definition of the Kirk regulations which say a minister is required to "occupy" the manse.
Mr Munro argued he did occupy the manse because he has possession of the property and uses it as an office.
He said: "I mentioned the Alice in Wonderland motto that we should say what we mean and mean what we say, particularly in church regulations, and for them to use the word 'occupy' if they meant 'live' was wrong.
"I also produced some case law from the United States where a woman was held to be 'living' in her principal residence because she kept it furnished and occasionally allowed guests to stay there. I will carry on occupying the manse."
He said he had received numerous supportive e-mails after the row was revealed in the Evening News on Thursday.
Presbytery clerk, the Rev George Whyte, said: "We are pleased the commission upheld our stance and we look forward to taking the matter forward in a way that is caring to all parties."