The Turnbull government's landmark higher education reforms have been killed off in the Senate, with the Nick Xenophon Team rejecting key elements of the $2.8 billion package and calling for a "Gonski style" review of the university sector.

The reforms would have led to university fees increasing by 7.5 per cent, the HECS repayment threshold falling from $52,000 to $42,000 and university funding being cut by 2.5 per cent through a new "efficiency dividend".

The government wanted to raise minimum fees by $2000 to $3600 per year for a four-year degree with a maximum payment of $50,000.

The changes will now not pass the Senate unless they are split into separate bills, forcing the Turnbull government to back down from its third attempt at widespread university funding reforms in the past three years.