The beleaguered "backpacker tax" is back in limbo after the Senate snubbed a deal between the Turnbull government and One Nation for a 15 per cent tax on backpackers and reduced it to 10.5 per cent.

The Labor amendment to reduce the rate was passed by 35 votes to 32, and had the backing of the Greens, Derryn Hinch, Jacqui Lambie, David Leyonhjelm and One Nation's Rod Culleton, who again split with the rest of his party.

It is a hugely embarrassing turn of events for the Turnbull government, which on Monday backed down from its proposed 19.5 per cent rate and trumpeted a deal with One Nation for a compromise position of 15 per cent.

Nationals leader Barnaby Joyce gathered his entire party room for a press conference to declare the issue "fixed", while deputy leader Fiona Nash said: "We now have a 15 per cent rate. It's a good outcome."