ROME—Italy's Senate has killed a proposed law that was hotly contested for maintaining a jail penalty against journalists convicted of libel, while imposing only fines for their editors.

The proposal was defeated Monday by a 123-29 vote.

The Italian journalists union called off a national strike Monday but was demonstrating to press their campaign to decriminalize libel altogether.

Parliament's efforts to do just that were circumvented by right-wing lawmakers' apparent moves to protect an editor who was sentenced to 14 months for libel under a rarely enforced Fascist-era law that allows a six-year sentence.

They changed the draft to impose a one-year jail sentence on journalists while lowering the penalty for editors to (EURO)50,000 ($65,000)—sparking protests from Italian journalists and Reporters Without Borders.