During an extensive two-day debate on the Local Government Bill, which will see greater powers given to 11 new-look 'super-councils' to be elected in May, flags again proved a divisive issue.
A petition of concern had been submitted with regards to three amendments on the flying of flags - meaning that they would require cross-community support to pass a vote.
The UUP had called for the Union flag on Belfast City Hall to be flown all year round, instead of on designated days - the policy which was voted in at council in December 2012, sparking protests.
The party also wanted the Union flag flown on all council offices at least on designated days and no other national flags to be used.
The Alliance Party had called for the Union flag to be flown from all council headquarters at least on designated days.
But the amendments failed to secure cross-party support from the DUP, Sinn Féin and SDLP and were not passed by the Assembly.
Alliance MLA Anna Lo expressed disappointment, adding: "The Alliance amendment would have created a standard policy in all councils and taken the whole flags issue off the agenda for the new councils.
"Rather than each of them getting embroiled in a row about where, when, and how to fly the Union Flag - distracting them from other more important issues."
During the lengthy debate, UUP MLA Tom Elliott said: "The fact is that the Union flag represents the constitutional position of Northern Ireland as part of the United Kingdom. That is enshrined here and that is the democratic position.
"I cannot for the life of me see why people cannot understand and accept that."
Sinn Féin MLA Michaela Boyle said her party had signed petitions of concern on the amendments because they "believe that they only fabricate difficulties that are not there".
Ms Boyle added during the debate: "The days of imposing British flags and emblems where they are not wanted are long gone."
Speaking afterwards, SDLP MLA Mark H Durkan said the shift in the focus of the debate to flags had let the public down.
"The Local Government Bill represents the biggest reform of local government in decades," he said.
"It should have offered an opportunity for constructive debate on how we can deliver for local people. Instead, however, other parties tried to reduce it to a petty, negative exchange on flags."
During the debate, DUP MLA William Humphrey insisted that the original decision to restrict the flying of the Union flag at Belfast City Hall had been unnecessary.
"There were six objections over the years that it flew," he said.
"The people of Northern Ireland, the people of this city and the unionist people of Northern Ireland -- Catholic and Protestant alike because, as we see in surveys time after time, a growing number of people are now supporting the union -- felt betrayed, hurt, and angry at the decision taken by those parties in City Hall."
Mr Humphrey also rejected suggestions that the designated days policy on flying the Union flag was in line with the rest of the UK, claiming "many councils" fly it 365 days a year.
Speaking after the debate, NI21 leader Basil McCrea said Belfast city centre traders would "have their head in their hands" over it - adding that the UUP amendment was "deliberately provocative".
"Knowing full well that Sinn Fein and the SDLP would put in a petition of concern against their amendment, it is clear the UUP was seeking a reaction," he said.
During the debate, TUV leader Jim Allister said: "If those who support - or claim they support - the Belfast Agreement, accept it, then they are supposed to have accepted that this territory of Northern Ireland is a part of the United Kingdom.
"There should be no surprise then that the flag of the United Kingdom is the flag of this territory."