MLAs have taken back control of the power to set allowances for members' offices and staff costs in a move that could cause "serious damage to the reputation of the Assembly".
MLAs voted to give the Assembly Commission, which is responsible for the day-to-day running of Parliament Buildings, control of allowances.
The move was backed by the DUP, Sinn Fein and the SDLP, while the UUP, Alliance, Greens and People Before Profit gave their support to an amendment from TUV leader Jim Allister.
The North Antrim MLA proposed that an independent body be given the role of setting future allowances, subject to Assembly Commission guidance.
However, Mr Allister's proposal was rejected by a vote of 67 to 20, with one abstention.
He said he feared that those behind the proposal had failed to learn from previous abuses of the expenses system.
"Those who tabled the motion must have short memories. I do not think that the public have," added the TUV leader.
"The public well remember that when the system that is proposed in the motion was in operation - namely, that MLAs controlled, through the commission, their own expenses - it was abused and the product was scandal."
Alan McQuillan was part of the panel in an independent review which previously determined the salaries, expenses and pensions paid to MLAs.
He said: "This decision takes them back 10 years. They will be the only legislative body in the UK or Ireland doing this.
"My fear is that, give it two or three years and we will find ourselves in the original situation, causing serious damage to the reputation of the Assembly."
DUP MLA Keith Buchanan, who put forward the allowances proposal, said the current rules failed to recognise economic realities facing MLAs.
"The motion will enable the Assembly Commission to ensure that members can legitimately purchase basic items to help them to deliver services to our constituents, that an MLA's contact details can be promoted on the constituency office, and, most notably, to ensure that the terms and conditions of employment of the staff who work in our offices are fair and reasonable," he added.
Sinn Fein's John O'Dowd argued that the TUV amendment would cause further delays to expenses reforms.
Mr O'Dowd said: "Go back to your staff in your constituency offices, or some of your staff may be sitting in offices in this building.
"Sit down in front of them, look them in the eye and say, 'I had the opportunity to correct a wrong, but I backed an amendment in the full knowledge that it would fail'."