The coalition failed to win over crossbenchers for its signature legislation that would have cracked down on unions, dubbed by Labor as the "Union Busting Bill".

The so-called ensuring integrity bill would have allowed for applications to be made to the Federal Court to de-register a union or union official if conduct was deemed inappropriate.

Labor and The Greens were joined by Jacqui Lambie and One Nation in opposing the bill.  The ABC reports that senior government ministers were agape while cheers rose from opposition benches.

Industrial Relations Minister Christian Porter said he was "very disappointed" with the vote and is demanding that Ms. Hanson explain herself.  

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