Immigration Minister Peter Dutton is watering down his proposed citizenship changes but not his political attacks after suffering a bruising defeat in the Senate.

He wants to extend the waiting time for permanent residents to apply for citizenship, to create tougher English language tests and to give himself additional powers.

The measures were tossed out of the Australian Senate on Wednesday night after the government failed to meet a deadline to bring legislation on for debate.

Immigration Minister Peter Dutton (pictured) is watering down his proposed citizenship changes but not his political attacks after suffering a bruising defeat in the Senate

Mr Dutton signalled on Thursday he was willing to cede some ground in negotiations with the cross bench.

The government initially wanted to lift English requirements from 'basic' to 'competent'.

The 'competent' level would require aspiring citizens to understand fairly complex language and have an effective grasp of English.

Mr Dutton has agreed to accept a 'modest' level, meaning would-be Australians must be able to handle basic communication.

Labor frontbencher Tony Burke (pictured) said the bill was 'an appalling policy, the likes of which we haven't seen since the White Australia policy'

That level would require only a partial command of the language, while making many mistakes.

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The government also wanted to impose its crackdown retrospectively to include anyone who applied for citizenship since its policy was announced on April 20.

It is now willing to hold fire on the changes until July 1 next year.

Mr Dutton is not impressed with being forced to negotiate with independent senators and is laying blame at the feet of his Labor foes.

'Our discussions with the independent senators will continue because we will not be distracted by a political stunt in the Senate between the Labor party and the Greens,' he told reporters in Canberra.

He wants to extend the waiting time for permanent residents to apply for citizenship, create tougher English language tests and give himself additional powers (pictured is a stock image)

'[Labor] have been caught out dancing again intimately with the Greens and if they are putting their own political interests ahead of the national interest, then they should be condemned for that.'

The government still faces an uphill battle to get its citizenship changes over the line, with Nick Xenophon's bloc of three senators not immediately won over by the last-ditch attempt to lower English standards.

Labor frontbencher Tony Burke said the bill was 'an appalling policy, the likes of which we haven't seen since the White Australia policy'.

Greens senator Nick McKim was similarly scathing, saying the bill's defeat was a great win for multicultural Australia and the thousands of people who have been in limbo since the policy was announced.