Sydney  - Australian Prime Minister Kevin Rudd's 42-billion-Australian-dollar (27-billion-US-dollar) spending programme was voted down in the upper house of the federal parliament on Thursday.

The opposition Liberal Party voted against the package and Labor failed to win the support of independent MPs it needed to get the legislation through both houses of parliament.

Rudd said the massive stimulus package would put the government deeply into debt but was necessary to stop the faltering economy from falling into recession.

Rudd raided the piggy bank in October for a 10.4-billion-Australian-dollar package of one-off payments to low-income families, first-time house buyers and pensioners.

The stimulus package that failed to get through parliament was more of the same: one-off payments to families, to farmers and the unemployed.

This time, as well as hand-outs to households and 2.7 billion Australian dollars in tax breaks for small businesses, there was to be infrastructure spending to pump-prime an economy that is guttering after 17 consecutive years of growth. The centrepiece was a 14-billion-Australian-dollar programme to renovate schools and provide free roof-cavity insulation for 2.7 million homes.

Labor doesn't have a majority in the upper house, or Senate, and needs the support of independents or minor parties to get its legislation through both houses.

The government is likely to send the legislation back to the Senate. Failure to pass at a second attempt might prompt Rudd to dissolve both houses of parliament and call a general election. (dpa)