"Uefa praised the high standard of the Welsh bid," said a Football Association of Wales statement.
"And that proves that we in Wales have first class facilities which will hopefully enable us to stage major football tournaments... in the future."
Wales' bid would have seen games staged at Swansea's Liberty Stadium, the Cardiff City Stadium and Llanelli's Parc y Scarlets with the final at the Millennium Stadium.
But the FAW said it was not all doom and gloom.
"We look forward to staging the Women's U19 Uefa finals in 2013 and preparing bids to host the Fifa U17 and U20 World Cups in 2015," added the statement.
"The FAW congratulates Israel on winning the bid to host the tournament and wishes them every success for the Uefa U21 Finals in 2013."
If England had won the bid, it would have made life much easier for the Football Association in terms of preparing a team for the London 2012 Olympics, which has an U23 limit with three over-age players permitted.
Had England been 2013 hosts they would not have needed to play in any of the Under-21 qualifying matches and could instead have played a series of Team GB friendlies in preparation for the Olympics.
Source: BBC Sport
Source: BBC Sport