The compromise state budget that emerged late Sunday left out a provision sought by Mayor Martin J. Walsh that would have permitted Boston-area bars and restaurants to stay open until 4 a.m.
Included in the Senate budget, the late-night license measure was highlighted by City Hall officials as a way of making Boston more attractive to foreign travelers accustomed to later closing hours.
But a group of city lawmakers actively opposed the later closing hours, saying they would diminish the quality of life in their neighborhoods, and lead to more drunk driving.
Their opposition set up a potential battle between Walsh and a group of his former colleagues in the Boston delegation, many of whom had backed his opponents in last year’s mayoral race.
Walsh, according to several people with knowledge of the debate, did not strenuously lobby House lawmakers to agree to the Senate language.
The mayor is also seeking other changes to liquor license policies, including increased control of the Boston Licensing Board, which currently tilts toward state control. He and other mayors have also asked Beacon Hill to allow for an increased number of licenses in their communities.