Australia Prime Minister sets up July 2 election

The country has repeatedly changed prime ministers since 2010, with Turnbull wresting power from his Liberal Party colleague Tony Abbott in September in a bid to revive flagging popularity.

The conservative leader had last month threatened to hold early general elections unless the Senate agreed to pass deadlocked legislation to overhaul unions.

Its rejection of the bill late Monday handed Turnbull a trigger to call a so-called double dissolution election under which all seats in the lower and upper houses of parliament are contested.

Turnbull said delivering the annual budget on May 3 was his priority.

"My intention is after the budget, an appropriate time after the budget has been delivered, I will be asking the Governor-General to dissolve both houses of the parliament for an election, which I expect to be held on the second of July," he told reporters in Canberra.

Turnbull stopped short of confirming the date of the election, but said July 2 would be "a very good assumption".

"But I just want to be very clear that we are governing, we have a lot of decisions to make, not least of which is the budget, the most important economic policy statement of the year," he said.

Turnbull, a millionaire former journalist, lawyer and investment banker, took over from Abbott promising a new style of government but has slipped in the polls in recent months as tax and other reforms have failed to materialise.

Australia has had a revolving-door of prime ministers in recent years. After a decade of rule under conservative leader John Howard, Labor leader Kevin Rudd won elections in 2007.

He was ousted by Julia Gillard the country's first female prime minister, in 2010, before being restored to power in 2013 amid bitter party infighting.

Just a few months later, Rudd lost elections to Abbott, who was then ousted by Turnbull last year.

Under normal conditions, Australian elections are held every three years for the House of Representatives and half of the Senate.

A double dissolution election can be called when key government legislation is blocked and sees the House and Representatives and the entire Senate dissolved.

Turnbull threatened to call the vote last month if the upper house, where crossbenchers hold the balance of power, failed to pass deadlocked legislation relating to the creation of a construction industry watchdog.

The government's bill aimed to bring back the Australian Building and Construction Commission (ABCC), scrapped by the former Labor government and loathed by union leaders.