The bill, introduced by Labor backbencher Stephen Jones, was defeated in the House of Representatives 98 votes to 42.

Ten of the 17 cabinet ministers in the lower house, Green Adam Bandt and independents Andrew Wilkie, Rob Oakeshott and Craig Thomson voted for same-sex marriage. All coalition MPs, the Prime Minister, Julia Gillard, the Treasurer, Wayne Swan, and the former prime minister Kevin Rudd voted against the bill.

Channelling another former Labor prime minister, Gough Whitlam, Mr Jones urged campaigners to ''maintain your rage'', while the Australian Christian Lobby leader, Jim Wallace, said it was time for Parliament to ''move on''.

Gay rights activists said they would now look to state and territory parliaments to make the change. ''Now the Federal Parliament has effectively brushed the wishes of a majority of Australians aside, the states and territories will take the lead, making me confident we will see same-sex marriages performed somewhere in Australia by the end of the year,'' the Australian Marriage Equality convener Alex Greenwich said.

Tasmania's lower house passed a bill last month to legalise gay marriage. It must still pass the state's 15-seat Legislative Council to become law. Efforts to legalise same-sex marriage are also under way in South Australia, the ACT and NSW, where the Premier, Barry O'Farrell, will allow his MPs a free vote.

The University of NSW law professor George Williams said state same-sex marriages would be a step forward but they would not be a substitute for national recognition because a marriage conducted in one state would not be recognised elsewhere.

Meanwhile, the opposition Whip, Warren Entsch, said he would consult with gay rights campaigners, the Opposition Leader, Tony Abbott, and his Coalition colleagues about introducing a bill for ''civil partnerships'' that would provide national legal recognition to both same and opposite sex couples.

The Senate is expected to vote today on a separate same-sex marriage bill co-sponsored by the Labor senators Trish Crossin, Carol Brown, Gavin Marshall and Louise Pratt.

In debate yesterday, the Finance Minister, Penny Wong, whose partner Sophie Allouache gave birth to a baby girl in December, described as ''hurtful'' arguments by some senators that the children of same-sex couples were worse off than those raised by heterosexual couples. ''I do not regret that our daughter has Sophie and I as parents,'' Senator Wong said.

''I do regret that she lives in a world where some will tell her that her family is not normal. I regret that even in this chamber, elected representatives denigrate the worth of her family. I will not rest in the face of such prejudice. I want for her, for all of us, an Australia which is inclusive and respectful, and this is why this campaign will not end here.''

The gay Liberal senator Dean Smith spoke against the bill, saying opinion in the gay community was divided.

''By not agreeing to same-sex marriage, I'm not choosing to endorse discrimination against my fellow gay and lesbian Australians, or to be disrespectful to their domestic relationships … instead for me, it's an honest acknowledgment of the special and unique characteristics of the union described as marriage,'' he said.

Senator Smith said while he was a man of faith, religious considerations had not influenced his thinking on the issue.