Senior Government figures have been left reeling after a shock vote harpooned their signature laws aimed at cracking down on unions.

Key points: One Nation and independent Jacqui Lambie denied the Government the votes needed to pass Ensuring Integrity Bill

One Nation and independent Jacqui Lambie denied the Government the votes needed to pass Ensuring Integrity Bill The Coalition insisted Senator Pauline Hanson repeatedly guaranteed she would support the bill — which she denies

The Coalition insisted Senator Pauline Hanson repeatedly guaranteed she would support the bill — which she denies This prompted calls for the Coalition to seek written agreements from One Nation to hold the party accountable

The Coalition had all but banked a victory, but ended the day trying to figure out what went wrong, as Labor senators celebrated into the night at Parliament House.

One Nation and independent Jacqui Lambie denied the Government the votes it needed to get its Ensuring Integrity Bill through the Senate.

The vote has One Nation leader Pauline Hanson facing accusations she told the Government's senior leaders one thing but acted another way.

The Coalition insists Senator Hanson repeatedly guaranteed she would support its crackdown on unions — a claim she denies.

There were gasps and cheers from the Opposition benches, while senior Senate Coalition leaders Mathias Cormann and Anne Ruston were left visibly shocked.

Adding to the surprise was that Senator Hanson, who had initially indicated she would support the bill, had repeatedly voted with the Government as the Senate considered amendments to the proposed laws.

That was until the final vote when she crossed the floor and delivered the fatal blow.

The move was so secretive that neither Senator Hanson nor One Nation senator Malcolm Roberts' offices knew it was going to happen.

Manager of Government Business in the Senate, Anne Ruston, reacts to the vote. ( ABC News: Luke Stephenson )

Multiple sources have pointed to potential ramifications for One Nation's vote, but they concede there is little the Coalition can do in response because it needs crossbench support to pass its legislative agenda.

Industrial Relations Minister Christian Porter dubbed Senator Lambie's amendments "totally unworkable" and said Senator Hanson had questions to answer.

"It does raise the really interesting question, why would you propose 11 amendments to a bill, ensure that the entirety of the week in the Senate was devoted to debating the very amendments that you, One Nation, put up and then ultimately to have them all accepted, and not support the bill?" he said.

"I've actually not seen anything like it, it is exceedingly strange."

The saga has even prompted calls for Coalition leaders to seek written agreements from One Nation to hold the party to account for its commitments.

Some sources have suggested One Nation has been biding its time awaiting to exact political revenge on the Coalition since Prime Minister Scott Morrison insisted his party put Senator Hanson's party behind Labor on how-to-vote cards in the May federal election.

Senator Hanson has rejected that.

She said she decided not to support the bill because it would have allowed company administrators to unleash unlimited power on unions if they were brought in to wind them up.

And she defended her decision to keep the Coalition in the dark.

"I don't have to tell the Government which way I'm voting, never did," she said.

Senator Roberts also offered the Coalition assurances he would support the bill. If he had broken with his One Nation leader, it would have been enough to prevent the tied vote that defeated the Government's efforts.

"Senator Hanson and Senator Roberts, the two One Nation senators voted with us all throughout the week on every contested vote in relation to time management, in relation to amendments — every single vote until the last one," Senator Cormann told the ABC.

"And you know we were absolutely blindsided and taken by surprise with that final vote."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 17 seconds 1 m 17 s Matthias Cormann says the government was 'absolutely blindsided' after One Nation voted against the signature bill

Government agenda takes an unexpected turn

The Government started the week with two pieces of legislation it wanted delivered during the final sitting fortnight of the year.

Senior leaders had factored in a possible loss on its bid to repeal the so-called medevac legislation but wanted to bring on a vote so it could say it had tried to do so.

That legislation is now slated for next week and it remains unclear what Senator Lambie, who holds the crucial vote, will do.

She has demanded the Government meet a condition which she would not disclose, other than to say it was related to national security.

"This is completely different than the Ensuring Integrity [Bill]. I've been having very close discussions with Minister [Peter] Dutton and with the PM on this ... and it seems to be heading in the right direction, in a good place," she said.

"I'm hoping that sort of after the weekend and early next week that we can certainly come to a conclusion on this, hopefully, I'm crossing my fingers."

The Coalition was more confident on its union proposals. The failure to deliver that has given Labor a victory its ranks have long been seeking since May's shock election loss.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 37 seconds 37 s Crossbencher Senator Jacqui Lambie says the government failed to negotiate properly with her

Coalition sources the ABC has spoken with said Senator Lambie had largely been left out of negotiations, with the focus on Centre Alliance and One Nation expected to deliver the votes.

Centre Alliance reached an agreement with the Coalition on a series of amendments, and offered its support in return.

"They had the chance to [support my amendments]," Senator Lambie said after the vote.

"But they didn't because they were too cocky that they'd get their win without me. Well, guess what. Look where that gets you."

Senator Lambie on Friday told the ABC she warned the Government that it might not have the numbers to pass the bill.

"I could actually see this all starting to fall apart late yesterday afternoon, and I still reached out to someone in the Coalition. I said 'please get them to come and talk to me because I think your numbers are starting to fall apart'," he said.

"So I did give them a warning, nobody still wanted to talk to me."

Coalition to reintroduce its union crackdown measures

The Government has vowed to reintroduce the bill, which Labor has dubbed "union-busting laws", early next year but will have to win over either Senator Hanson or Senator Lambie to win a vote in the Senate.

However, Liberal senator Eric Abetz questioned whether Senator Hanson could be trusted.

"It was an absolute disappointment, One Nation traded with us in a manner that was not fair dinkum, it did not show any integrity, nor did it show honesty," he said.

"Once you've done a deal, shaken hands, believe you have an understanding, to have someone renege on that without any prior warning whatsoever is not the standard you'd expect anywhere — least of all the Parliament."

There is widespread speculation among senators across the political divide that Senator Hanson wanted to send a message to the Government that it couldn't take her support on votes for granted.

Labor sources the ABC has spoken with said very few of the party's senators knew how Senator Hanson would ultimately vote.

Some said they were optimistic but thought it would be an outside chance One Nation would vote with Labor.

Senator Kim Carr said it was a "remarkable day for the Labor movement and working people".

"Everyone is shocked, they were dreading the prospect of what this bill meant for wages and conditions and living standards," Senator Carr said.

"I am delighted," Don Farrell added.

"Unions can now get back to doing their job of representing working people without the prospect of this draconian legislation," he said.

Some in Labor are wary Senator Hanson might change her mind if the bill is brought back.

A senior ALP figure said Labor had done the numbers better, while the Government had taken them for granted.

New South Wales Labor backbencher Tony Sheldon, a former union official, said the credit deserved to go to the workers who had lobbied the crossbenchers to reject the Government's proposal.

"It was one of those moments were a lot of us were absolutely excited to see both Jacqui Lambie and Pauline Hanson listen to hard working Australians, and stood-up with the rest of us," he said.

Labor sources said very few of the party's senators knew how Senator Hanson would vote. ( ABC News: Luke Stephenson )

Pressure on One Nation to back the bill when it returns

Queensland LNP senator Gerrard Rennick said One Nation had damaged its relationship with the Government in the short-term.

"I was extremely disappointed, but not surprised," he said.

"Pauline's flip-flopped for the last 20 years."

Industrial Relations Minister Christian Porter shortly after the vote released a statement vowing to reintroduce union crackdown laws.

That's welcome news for Australian Industry Group chief executive Innes Willox, who had dubbed yesterday's result a disappointment for employers.

"In the end all this is going to do is embolden unions, embolden bad behaviour by particular unions, and in the end the community will pay," he said.

"It's up to Pauline Hanson and Jacqui Lambie to explain why they voted as they did, but I guess this just proves the political maxim you can only trust those who say no to your face."