South Australian senator Nick Xenophon has backed away from demands over the Murray-Darling Basin plan, paving the way for a vote on the Government's key industrial relation bill.

Senator Xenophon had threatened to hold up legislation until the Government found an extra 450 gigalitres of water to restore the health of the Murray River, but a compromise was reached on Tuesday.

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The Coalition needs Senator Xenophon's bloc of three votes in the Upper House to pass the Australian Building and Construction Commission bill, which triggered a double dissolution election in July.

In return for Senator Xenophon dropping his demand for 450 gigalitres, Prime Minister Malcolm Turnbull wrote to South Australian Premier Jay Weatherill outlining a plan to strengthen scrutiny of the plan.

"I propose that we make the progress of the Murray-Darling Basin plan a standing item at every COAG meeting so that first ministers are regularly monitoring and comparing progress of the plan," the Prime Minister said.

"The Government will also establish a special estimates process to be held twice yearly in addition to the usual portfolio hearing, enabling Senate scrutiny of all the relevant agencies to review the progress of the plan."

In a statement, Senator Xenophon said the letter outlined "a much better process" to ensure the implementation of the Murray-Darling Basin plan.

Senator Xenophon has called for amendments to the ABCC legislation including greater provisions for subcontractors, but believes the bill has a 50 per cent chance of passing the Senate.

"We can now consider the ABCC on its merits," he said.

The South Australian senator told the chamber the compromise was "a reset" for the Murray-Darling Basin plan and would ensure money is spent appropriately.

"I am satisfied with the correspondence between the Prime Minister and Premier Weatherill about the commitments made, about the processes put in place," Senator Xenophon said.

Greens and Labor accuse Xenophon of selling out South Australia

South Australian Labor senator Penny Wong said Senator Xenophon had "sold out" and was using the compromise as an excuse to vote for the ABCC bill.

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"I think it is very disappointing for all South Australians because we wanted Nick, along with every South Australian senator and member, to stand up for South Australia," she said.

"We needed water, we didn't need more talk."

Greens senator Sarah Hanson-Young said Senator Xenophon had sold South Australian voters down the river.

"Senator Xenophon might talk a big game, but time after time again he squibs it in the end," she said.

"It's sad, but predictable, that yet another week of histrionics from Senator Xenophon has resulted in not one drop of extra water coming to South Australia."

National Irrigators Council chief executive Tom Chesson said additional scrutiny and accountability measures were welcome.

"As this week has again highlighted, anything which improves senators' — and other state and federal politicians' — understanding of water issues in the Murray-Darling Basin can only be a good thing," he said.