Supporters of the measure said restricting immigration would safeguard Switzerland’s environment by reducing the need for new transport links and new housing.
The proposal also included a measure to limit overpopulation abroad by devoting 10% of Switzerland’s overseas aid to family planning in developing countries.
Opponents, among them all the major political parties, argued that the proposals would be bad for the economy because business leaders wanted to be able to recruit skilled labour from across Europe.
They also feared that if passed, the measure could put the country in breach of its international commitments and damage its image.
Many environmental groups argued that if the Swiss really wanted to protect their environment, they should adjust their own lifestyles, the BBC’s Imogen Foulkes said.
Immigration in Switzerland
Switzerland’s population is about 8.18 million – of whom 1.96 million are not Swiss nationals, according to the Swiss Federal Statistical Office (FSO)
EU citizens make up the vast majority of immigrants in Switzerland
The largest group of foreign nationals living in Switzerland is Italians; immigration from Italy started more than a century ago, but difficulties getting Swiss nationality meant many families remained Italian
The second largest group comes from Germany, and the third largest comes from the former Yugoslavia.