Mr Puigdemont said his party would propose a pro-secession campaigner, Jordi Sanchez - now in remand in a Madrid prison on charges of sedition - as an alternative candidate. The decision "does not fully guarantee the restoration of our autonomy", he said, "but it will give us the freedom to undertake the next phase of the road towards independence".
'I know that the path we have ahead is long and fraught with difficulties'.
The Supreme Court is looking into whether two dozen Catalan separatists, including Mr Sanchez, should be charged for rebellion and sedition, which can be punished with decades in prison. Spain was not in favor of the move, sacking the regional Catalan government and imprisoning several key pro-independence figures. Mr Puigdemont had campaigned to be re-instated as the region's leader.
Separatist parties in the regional parliament insisted earlier on Thursday that Mr Puigdemont is their legitimate leader despite a ruling by Spain's Constitutional Court that he can not take office because he is not in Spain.
Madrid has rejected Mr Sanchez's candidacy, with Justice Minister Rafael Catala saying it was "difficult" to contemplate a president of one of Spain's autonomous regions being in jail and thus unable to carry out his duties.
At the end of January, the Catalan parliament's speaker - also a separatist - postponed a key vote to reappoint him as president.
Puigdemont fled to Belgium in October after declaring Catalonia's independence from Spain.
The MPs voted on the first motion since the December elections, as talks continue to form a regional government.
The region of Catalonia held a referendum in October of 2017, leading to a unilateral declaration of independence.
In a video posted to his Twitter account on Thursday, Puigdemont said he informed the President of the Parliament of Catalonia "to start as quickly as possible the round of contacts with the different parliamentary groups to proceed with the election of a new candidate to be invested as president of the regional government".