Australia will likely head to the polls on 2 July after the federal upper house voted down legislation aimed at policing construction industry unions.
The Australian Building Commission and Construction Commission (ABCC) bill was defeated by 36 votes to 34.
The Senate has voted down the ABCC bill twice, giving the government the trigger for calling an early election.
An election may benefit Prime Minister Malcolm Turnbull, who needs a clear mandate amid falling opinion polls.
Mr Turnbull used an obscure provision in the constitution to call back parliament from its recess to debate the ABCC bill this week.
The prime minister had made it clear that if senators rejected the bill a second time, he would call what is known in Australia as a double-dissolution election.
That’s a mechanism in the Australian constitution that allows the government to call for an election if a piece of legislation is blocked twice in the upper house.