Tasmanian Senator Jacqui Lambie said the government had mismanaged the bill by failing to consult with her onamendments she released on Wednesday night that would have made sure ordinary union members were not hurt by the changes.

"They wouldn't even talk to me about my amendments because they already thought they had the votes,"she toldThe AgeandThe Sydney Morning Herald.

WhileSenator Lambie wants to drive Construction,Forestry,Maritime,Mining and Energy Union boss John Setka out of the union movement,she said the government's position meant the bill would hurt ordinary union members.

"My amendments would have left most of the other unions alone,unless they were especially bad,and they could have gone on with their daily grind and the bill would have hit the CFMMEU and John Setka,"she said.

Senator Hanson's move came after she and colleague Malcolm Robertsnegotiated amendments with the government aimed at softening its impact on unions.

The government had been widely expected to pass the bill,with one employer group even releasing an embargoed press release welcoming its passing on Thursday afternoon.

Attorney-General Christian Porter said the government had not given up on the bill and intended to reintroduce it"at an appropriate time".

"Obviously I am very disappointed in the result in the Senate,"he said.

"This is important reform which seeks to ensure that registered organisations obey the law ... It's for Pauline Hanson to explain why she voted against a bill that met every requirement she sought through extensive consultation."

But Senator Hanson played down the prospect that she would switch her postition on the bill this year,saying she wanted to see action rather than words from the government on dealing with white-collar crime.

Labor's industrial relations spokesman Tony Burke said the government's"anti-worker,union-bashing laws ... should now be abandoned".

"The government arrogantly believed they had this vote in the bag,"Mr Burke said.

The bill's defeat is a significant blow for the Morrison government's industrial relations reform agenda and comes as Mr Porter consults on proposed changes to allow major infrastructure employers to lock in pay rates for the length of their projects.

Mr Porter has also signalled a review of the award system,the minimum wage safety net,which employers argue is"too complex".

Australian Industry Group chief executive Innes Willox said the Senate result was a"disappointing win for union thuggery"that would embolden the militant CFMMEU.

"The final version of the legislation had safeguards built in to ensure that only the worst of behaviour would be sanctioned.

"The CFMMEU's conduct displays blatant contempt for the laws already passed by Parliament. No organisation can be allowed to adopt a business model of law-breaking and to treat the fines imposed by courts as just the cost of doing business."

Australian Council of Trade Unions secretary Sally McManus said the union movement would continue to fight the Coalition's industrial relations agenda,including proposed changes to the award system.

"I've got a message for Scott Morrison:don't mess with working people,"Ms McManus told reporters in Canberra on Thursday night.

She said the government was travelling in"an authoritarian direction",seeking to link the union bill with media raids on journalists as part of a crackdown on the twin democratic freedoms of worker association and the press.

Mr Porter and Centre Alliance senatorRex Patrick,who negotiated amendments with the government,both refused to negotiate with Senator Lambie after she released her amendments,saying her proposed changes came too late in the debate.

During the debate on Thursday,Labor senators spoke at length about the potential for the bill to impact on workers'right to strike,which the Lambie amendments had sought to address.

Labor senator Tony Sheldon,former secretary of the Transport Workers Union,recounted how the union had taken unprotected industrial action - which would incur demerit points under the bill - to protest unsafe working conditions for armoured guards after a fatal shooting.