The Abbott government hopes an ambitious Pacific free-trade deal can be salvaged despite a major setback in the US Congress.

Democrats in Congress have defied President Barack Obama and voted down a package of bills designed to speed up negotiations on the long-gestating Trans-Pacific Partnership, or TPP. The loss is humiliating for Mr Obama and leaves the fate of the proposed 12-nation pact uncertain.

Democratic members of Congress hold a news conference to voice their opposition to the Trans-Pacific Partnership trade deal at the U.S. Capitol. Credit:AFP

Australia, which joined TPP negotiations in 2008, believes it would bring down trade and investment barriers throughout the region and deliver significant benefits to the local economy.

Trade Minister Andrew Robb says the Congress defeat is part of the "cut and thrust" of American politics.