University funding cut has failed in Australian Senate.

A proposal to increase fees for tertiary students and cut some university funding has failed to win enough support to pass the Senate.

The federal government was relying on the support of key Senate cross benchers to pass its higher education overhaul.

The package included cutting university funding, increasing student fees and lowering the repayment threshold for HECS-HELP student loans.

The Nick Xenophon Team (NXT) says it opposes the funding cuts.

Speaking to the ABC, Belinda Robinson from Universities Australia described the NXT's decision as a "victory for common sense".