The Senate has rejected a Government bill to set up a fund to help commercial property companies that are struggling to refinance their loans.

The Greens combined with the Opposition to defeat the so-called "Ruddbank" plan.

The Coalition said the plan put too much taxpayers' money at risk.

Greens Leader Bob Brown says he refused to support it because the Government would not back his proposal to put a $1 million cap on the salaries of executives whose companies used the fund.

"You'll find no-one in the public system anywhere in Australia, including the prime minister, who are getting anywhere near $1 million a year," Senator Brown said.

"Yet this Labor Government says [they are] not prepared to put such a cap on the captains of a development corporation which is failing and which requires the diversion of public funds away from education, health and other essential services to bail them out."

Federal Treasurer Wayne Swan says the Opposition is risking the livelihoods of thousands of people by voting against it.

Mr Swan says the Senate's actions mean that thousands of Australians involved with the commercial property sector could lose their jobs including plumbers, electricians and carpenters.