The Chinese government has said Taiwan will not be a member of a new regional bank, but would be welcome in the future under a different name.
China is leading the set-up of the Asian Infrastructure Investment Bank, a project opposed by the US.
Taiwan, which split from China in 1949, wanted to join the bank as an independent nation.
But China regards Taiwan as part of its territory and was expected to reject any move which suggested otherwise.
Taiwan's government has reportedly said it will continue to press the case for its inclusion. The bank was created in October with 21 members.
Ma Xiaoguang, a spokesman for China's State Council Taiwan Affairs Office, confirmed a recent report that Taiwan would not be a member.
He said that the bank "is open and inclusive, and welcomes Taiwan to join under an appropriate name", and added that they would be "open to suggestions from all sides".
A report by Taiwan's Central News Agency quoted a spokesman for the executive branch of Taiwan's government as saying that Taiwan should join the AIIB "under the principle fairness and equality".
Taiwan's parliamentary speaker Wang Jin-pyng also said that Taiwan will now seek to become an ordinary member of the bank, instead of a founding member.
He added that the government would not accept anything less than calling Taiwan "Chinese Taipei" - the name under which Taiwan is referred to by the International Olympic Committee.
Taiwan's government officially calls itself as the Republic of China. It goes by the name "Taipei, China" as a member of the Asian Development Bank, and is known as the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu at the World Trade Organization.
The AIIB will fund Asian energy, transport and infrastructure projects.
In October, 21 countries signed the memorandum of understanding establishing the bank. Besides China, they included India, Thailand and Singapore.
It now has more than 40 members, with South Korea, Austria and Spain's membership confirmed on Saturday.
The UK has applied to join the bank, earning a rare rebuke from the US in March which said it had "concerns" about whether the AIIB would meet governance standards and maintain environmental and social safeguards.