Both Labour and Conservative members said they did not think there was enough parking at the site that had been chosen on High Street and Cockburn Street.
And they were also not convinced that spending £45 million was the right thing to do at a time when council budgets were so tight.
Labour leader Robert Bissett said: “I have yet to speak to anyone who believes that this is a good proposal and I certainly don’t agree that a building 150 yards from the high street will not have a similar impact as one on Cockburn Street.
“The impact of construction on Cockburn Street would disable the high street – it’s the worst site in Falkirk – while the current site will present no real difficulties for the area.”
The councillors were supposed to be deciding between two options – one that would see a new HQ, theatre, library, dance studio and advice hub built on Falkirk High Street, as proposed by the SNP.
The other option – proposed by Labour – was to look at two separate buildings, with offices being built close to the current site and the theatre, library and hub on the High Street location.
The meeting began with a plea from Falkirk Council’s chief executive, Kenneth Lawrie, for councillors to back the plan after three years of debate, which he hoped had been a “journey” to make a final decision.
It was also pointed out the reports that had been called for had cost £500,000 so far – money that would be wasted if the Labour amendment was taken.
The report in front of councillors showed Labour’s proposal would be £14m more expensive.
But the Labour group did not accept that meant they should support council officers’ recommendations at a time when budgets have never been tighter.
Instead, they have asked officers to go back to the drawing board to look at plans for an office, with civic space, on the site of the old NHS clinic beside the existing municipal buildings.
They want to refurbish the town hall, rather than rebuild it and in the future, they said, would consider a separate advice hub and library on Falkirk High Street.
They was backed by the Conservatives, who have long been sceptical about how successful the arts centre would be and who had serious doubts about the lack of parking on the proposed site.
It was a bitter blow for the minority SNP administration, which believed the new centre would create jobs in the town centre and revitalise it.
Council officers’ reports have looked in detail at the various options over the past three years and officials tried to persuade councillors that the current proposal was cost effective.
When questioned, acting director of development, Douglas Duff, said he doubted the Labour group’s proposals could be delivered for less than £35m.
Mr Duff and the chief executive also said they did not think the new plans would attract the £6m funding from the Growth Deal that had been expected for the new arts centre.
Council leader Cecil Meiklejohn said: “I’m really disappointed that we’re throwing out such a major project, pure and simply over parking – an issue that we know can be resolved through the planning process.
“It’s a red herring and it’s appalling that’s the best they can come up with.
“We see across the country people using culture and heritage – which we are so rich with – as a way of regenerating their town centre, bring people in to create jobs and secure jobs.”