Australia's prime minister says he intends to call a rare early election, with the nation likely to head to the polls in July amid waning popularity for the ruling conservative party.

Prime Minister Malcolm Turnbull's comments on Tuesday all but confirmed that Australia was on track to hold its first early election since 1987. The early election is called a "double dissolution" because both the House of Representatives and the Senate are dissolved.

Turnbull has until May 11 to officially announce an early election. He had previously said he would call for a double dissolution if the Senate failed to pass government legislation that would create a construction industry watchdog. The Senate rejected the bill for the second time on Monday, providing the trigger Turnbull had been waiting for.