Queensland's Government will be the subject of an unprecedented federal inquiry after a deal between the Palmer United Party, Labor and the Greens.

Clive Palmer has been engaged in a bitter and long-running personal feud with Premier Campbell Newman and has now been given a significant weapon to use against him.

It is a loss for the Federal Government which had successfully seen off a previous attempt to establish the inquiry, arguing it was without legal precedent and overrides parliamentary convention.

Over the next six months the committee will examine Queensland's use of Commonwealth funds, the administration of the state's judicial system, and questions around development and environmental approvals.

The select committee, which will consist of five members but only one from the Coalition, has a reporting date on or before March 27 next year, very close to the date of the next Queensland election.

Mr Newman is on holidays but issued a statement calling the inquiry a stunt.

His federal counterparts said the inquiry would abuse an established principle that federal and state parliaments stay out of each other's business.

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Senator Eric Abetz, the Leader of the Government in the Senate, said it was part of Mr Palmer's vendetta against Mr Newman.

"Basically it's a bitch session about Queensland," Senator Abetz said.

"What's the concluding time for this senate inquiry? Oh, it just happens to coincide with the Queensland election.

"This inquiry makes a travesty of the Senate committee process. It will backfire badly and come to haunt Labor, the Greens and Palmer United in Queensland.

"Queenslanders will not take kindly to this abuse of Senate process to attack their elected Government."

Attorney-General George Brandis was equally outraged with the outcome: "This motion is out of order, it is unlawful and it is a disgrace."

Newman accused of 'many questionable decisions'

Before the Senate voted to set up the inquiry, Mr Palmer was asked by reporters whether the inquiry represented a conflict of interest given his Queensland mining ventures.

Mr Palmer said it did not.

"There's a whole lot of terms of reference," he said.

"No-one may come forward in any of these issues, and some people may. We'll just see what happens."

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After the vote, Queensland PUP senator Glenn Lazarus said Mr Newman had "made many questionable decisions" and sought to politicise the Queensland police and "bring the state's judiciary and legal process under his control".

"The inquiry will serve to investigate Premier Newman's questionable tactics concerning the reformation and operation of the Parliamentary Crime and Corruption Commission."

Labor's opposition to the inquiry melted when Mr Palmer agreed not to look further back than the day Mr Newman replaced the Bligh Labor government.

Frontbencher Stephen Conroy accused the Coalition of being hypocritical, saying "it has called royal commissions to pursue its own nasty political vendettas".

The Greens agreed to support the inquiry because it would also assess whether the Federal Government should be allowed to delegate environmental approvals to the state.

"We've clearly put the position that if the Newman Government were so awful as to warrant an inquiry into their terrible track record, clearly they should not be given more powers over the environment, and I'm pleased that the Palmer United Party have agreed with that logical conclusion," said Greens senator Larissa Waters.