The Abbott government has been dealt a major body blow. Its plans to wind back financial advice laws are in tatters after controversial senators Jacqui Lambie and Ricky Muir decided to band together and support a move against them.

The debate to remove regulations that were introduced by the government to water down the former Labor government's Future of Financial Advice (FOFA) reforms will begin this morning.

Under pressure to find a compromise: Finance Minister Senator Mathias Cormann. Credit:Alex Ellinghausen

Announcing the plan, Senator Nick Xenophon said there would be no time limit on the debate.