The Abbott government has suffered another blow in the parliament, with its controversial budget measure to force young people to wait for welfare voted down.
The Australian Greens, Labor and crossbench senators joined forces on Wednesday to reject the bill, which would have forced people under 25 to wait one month for welfare payments.
It was a compromise on the initial plan revealed in the Abbott government's first budget, which would have imposed a six-month waiting time on young people looking for work.
The bill would have also cut payments for people aged 22 to 24 by $48 per week.
Assistant social services minister Mitch Fifield said evidence from New Zealand showed when a similar wait-for-welfare measure was introduced 40 per cent of job seekers remained off welfare.
During the waiting period, young people would complete pre-benefit activities such as learning to write a resume and building job seeker profiles online, he said.
And job seekers who had significant barriers to work would not be required to complete the full waiting period.
But Labor says the measure will push young people into financial hardship and poverty and adversely affect mental health.
The opposition maintains there is no evidence the measure would actually help people into work.
Labor senator Claire Moore said young people would be expected to turn up to training and other activities but would not have access to money to help pay for transport, food and housing.
Prior to the vote, Social Services Minister Scott Morrison issued a warning to the Senate, saying the government would reintroduce the bill if it failed.
"We remain absolutely committed to the measures we have brought to the parliament on this issue," Mr Morrison told reporters in Canberra on Wednesday.
"We do not believe that we should be sending a message to young people that it should be okay to go from the school gate to the Centrelink front door."
The Australian Greens said four weeks was long enough for a young person to get into $1000 of debt.
"This measure would have entrenched poverty and made life more difficult for Australian youth," Greens senator Rachel Siewert said in a statement.
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