Prime Minister John Howard says the Government will not be proceeding with its controversial migration Bill.
The laws, under which all asylum seekers arriving by boat would have been processed offshore, passed the Lower House last week but numbers were tighter in the Senate.
It would have taken just one Coalition senator to cross the floor, or two to abstain from the vote, for the Bill to be lost.
Mr Howard says he is disappointed the Bill will not go ahead, but it could not succeed.
"What has happened is that the Labor Party and a small number of Coalition members and senators have together - not acting together, let me make that clear - but their views have virtually coincided, that combination means we would not secure passage of the legislation," he said.
Congratulations to all who took a stand on this issue. Now we need to roll back the current laws to bring them in line with human rights requirements.