Labor, One Nation and David Leyonhjelm on Thursday successfully backed independent Jacqui Lambie's amendment to almost halve the coalition's 19 per cent rate, but the government used its numbers in the lower house to vote it down.
The bill will head back to the upper house to decide if it will insist on the changes, propose others or revert to the original proposal.
The Senate earlier on Thursday backed independent Jacqui Lambie's amendment to almost halve the government's proposed 19 per cent rate.
One Nation and David Leyonhjelm supported the 10.5 per cent tax while the three Nick Xenophon Team senators and Derryn Hinch sided with the government.
The bill needed to go back to the lower house where the government has the numbers to reject the change.
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The government had warned the existing tax rate of 32.5 per cent will apply to working holiday makers unless its revised rate passes parliament.
"This is a plain act of economic vandalism by the Labor party," Prime Minister Malcolm Turnbull told MPs in answer to a question from Opposition Leader Bill Shorten.
The government managed to secure a small win in the upper house, undoing an embarrassing bungle from Wednesday night when its bill for a $5 hike to the international departure tax was scuttled by the absence of two One Nation senators.
Pauline Hanson and Brian Burston, who were attending a function elsewhere, were unaware the Senate was voting on the measure.
Labor agreed to the government's request to recommit the bill, but not before demanding an explanation from the two senators who apologised for the misunderstanding.
The measure passed the Senate on Thursday after the government agreed to a One Nation request to freeze the new $60 departure tax for five years.
Opposition leader in the Senate Penny Wong said the deal was worthless.
"You cannot bind a future parliament - you have been conned," she told One Nation senators.
"They've done a deal with you because they've got egg on their face - this is no way to run a government."
Greens leader Richard Di Natale said One Nation had been dudded.
"You might as well have had an amendment that said we want world peace."
Senator Hanson said her staff were still trying to learn the ropes and denied suggestions she had been duped.
"I will not be bought - my deal is only done for the people of this nation."
'Lap dogs'
A press conference turned into a heated argument between Ms Lambie and the newly elected National Farmers Federation president Fiona Simson over the backpacker tax.
"At this point it's just going to ping-pong back and forth, and we really want to be constructive with the crossbenchers," Ms Simson said, saying she wanted to talk to Ms Lambie about her members.
"They're already disadvantaged because of the lack of backbone the National Farmers' Federation have had in the first place by playing lapdogs for the Liberal-National parties," Ms Lambie said.
"If you'd stood your ground, like you did that first time I went out there at 10.5 per cent, instead of moving, we wouldn't be in the predicament we are."
