The bill, supported by more than 70 journalism organizations including The Associated Press, would only apply to federal courts and leave intact state protections for journalists and their sources.
The failure of the Senate Judiciary Committee to act was a disappointment to Chairman Patrick Leahy, D-Vt., who expressed hope last week that the committee would approve the legislation this week.
Republicans have argued for some time that the bill was tilted toward reporters and against the intelligence community, but Intelligence Committee Chairman Dianne Feinstein, D-Calif., said she also believes a balance has not yet been struck.
Chief sponsor Charles Schumer, D-N.Y., said he met on Wednesday with Attorney General Eric Holder and asserted, "We are well on the way to a compromise. We will have the administration's support."
Feinstein, tempering that optimism, said she could not vote for the bill as now written. She noted that former and current intelligence officials have said the ability to run their operations are "harmed by the constant barrage of leaks." She added the Justice Department has not prosecuted the leakers.
Republicans then cited letter-after-letter from current and former intelligence officials opposing the legislation. FBI Director Robert Mueller expressed concerns about a shield law in testimony Wednesday, although it was unclear whether he referred to the current bill.
Justice Department spokesman Matthew Miller declined to comment on the negotiations.
The ranking GOP member of the committee, Republican Jeff Sessions of Alabama, said the Justice Department has subpoenaed reporters in only 19 cases from 1992 to 2006 and in only two cases from 2004 to 2006.
Arguing the bill was not needed, he called it puzzling that the Free Flow of Information Act _ the bill's title _ would make it more difficult to bring to justice anyone who leaks classified information.
Sen. Jon Kyl, R-Ariz., said Republicans need to be included in negotiating with the administration, adding it made no sense to move forward on a version "that we all agree is not going to be the bill."
In the most publicized case in recent years, former New York Times reporter Judith Miller was imprisoned for 85 days in 2005 for refusing to identify the Bush administration officials who spoke with her about CIA employee Valerie Plame.
The public revelation of her name led to the perjury and obstructing justice conviction of I. Lewis "Scooter" Libby, who was chief of staff to Dick Cheney when he was vice president.
As part of its balancing act, the current bill would require a journalist to disclose information when:
* A court determines that the information came from criminal conduct, or from observing criminal conduct.
* The information is material to preventing, mitigating, or identifying an act of terrorism.
* The information is reasonably necessary to stop, prevent, or mitigate a specific case of death, kidnapping, or substantial bodily harm.
The House has passed its own version of the legislation.
By: A proposed federal shield law that would give journalists a limited right to protect confidential sources from disclosure was sidetracked again Thursday, after senators from both parties said the current version could damage national security.