The Health Select Committee has voted against a motion to investigate the decision to downgrade the Lumsden Maternity Centre.
The Southern District Health Board announced last year the centre would become a hub where babies are only delivered in emergencies, but that decision has been criticised by local midwives who have said the model is unsafe.
Clutha-Southland National MP Hamish Walker has opposed the decision to downgrade from the start, and lodged a petition with the Health Select Committee to investigate it.
The committee today voted not to investigate.
Midwives have also been frustrated by a lack of on-call backup and pain relief for mothers, although an additional on-call midwife has recently been added.
A review to check on the implementation of the new hubs system for Southland is already planned.
Mr Walker said voting against the motion was ludicrous because four mothers had already been unable to reach a primary birthing unit in time.
He said an inquiry was needed because the health board had ruled out reviewing its decision and reviewing its maternity strategy.
Southern District Health Board chief executive Chris Fleming has previously said service for the region overall had been improved by the changes, and more money was now being spent on maternity services.
The change was alongside the creation of new birthing hubs in Te Anau and Wanaka, which Mr Fleming said made the service better overall.
He has noted that less than one birth a week took place at Lumsden on average - a rate which appears to have continued since the centre was closed.
The committee also has a separate petition to reinstate full birthing services at the Lumsden centre, and is expected to discuss that next week.
Supporters of Lumsden centre said they weren't giving up and would continue to campaign to reinstate services.
Northern Southland Medical Trust trustee Carrie Adams said the select committee's decision was a setback, but not the end of the road.
"Our community has been so in behind throughout this process that I think that there's still a will to carry on to try and get the best outcome here. Yes, we're talking about our community but the issue is a lot bigger than that as a model of care," Ms Adams said.
The trust used to run the Lumsden Maternity Centre. Ms Adams said the concerns about a lack of nearby primary birthing units were not going anywhere.
"An investigation at a central government level would have recognised that," she said. "Having more consolidation and recognition of that at a central government level through the Health Select Committee process I think could have really assisted to understand what maternity care is going through."
The decision left Lumsden doctor Mathew Stokes bitterly disappointed, and he said rural maternity services had been neglected.
"I have no faith in the process that the SDHB followed to come to the original decision.
New Zealand College of Midwives has put a locum midwife in Lumsden while more permanent support for the area's midwives is sought.
College president Alison Eddy said she was disappointed to hear the government decided not to look more closely into the decision, but she was not surprised to hear people were still pushing to bring back birthing services.
"I think it really highlights the depth of attachment that communities have to these services ... they really are a really key support structure for the community.
"When people ask you 'where were you born?' It's a really important question, isn't it? It really connects you to that community, and I think those rural women and their families understand that."
Southern District Health Board welcomed the Health Select Committee's decision.
In a statement, it said significant progress was being made with other stakeholders to look at the maternity service needs in Northern Southland.
"Providing sustainable maternity services in rural areas is challenging for a range of reasons and requires a whole of system approach, involving LMC midwives, the Ministry of Health, and other health care providers - and goes beyond what we can provide in a maternal and child hub.
"Addressing this constructively is a better use of our resources than relitigating a decision around a specific facility, and we are pleased the Committee has recognised this."
There's hope the future of the maternity care will be a little clearer next week when the Health Select Committee considers a petition to bring back full birthing services to Lumsden.