Cabinet Secretary Arthur Sinodinos will be required to appear before a new federal parliamentary inquiry into political donations.

The inquiry into donations and associated entities will be established following a successful Labor motion in the Senate, passed by the Upper House this evening.

The motion — put forward by Opposition Leader in the Senate Penny Wong — also called for an examination of whether the powers given to the Australian Electoral Commission were sufficient.

It follows a report issued by the NSW Electoral Commission last month, in which it announced it was withholding more than $4 million in public funding from the NSW division of the Liberal Party, unless it disclosed the identity of donors pushing funds through the party's fundraising body.

It alleged the body, known as the Free Enterprise Foundation, funnelled hundreds of thousands of dollars from property developers to the state Liberals in 2011.

Senator Sinodinos was the NSW Liberal Party treasurer at the time and said he had no knowledge of what was done with that money.

Labor Senator Lisa Singh described the inquiry as worthwhile, but Attorney-General George Brandis said directing Senator Sinodinos to appear would set a shocking precedent.

"That is unprecedented and a violation of a very fundamental party principle," Senator Brandis said.

"Senate committees can call any individual, including members of the Senate, before them.

"The Senate cannot direct a member of the Senate to appear before a committee."