The US senate has rejected President Barack Obama's job creation package, in a sign that the administration is unlikely to take major steps to spur hiring before the 2012 elections.

The $447bn package of tax cuts and new spending failed on Tuesday by a vote of 50 to 49, short of the 60 votes it needed to advance in the 100-member senate.

The plan would have combined payroll tax cuts for workers and businesses with $175bn in spending on roads, school repairs and other infrastructure, as well as unemployment assistance and help to local governments to avoid layoffs of teachers, firefighters and police.

Ben Nelson and Jon Tester, both up for re-election next year in states where Obama figures to lose, were the only two Democrats who broke with their party on Tuesday night's vote.

Every Republican present opposed the plan.

Both parties were sure to wield the vote as a political weapon in the run-up to next year's presidential election, with Democrats accusing the Republicans of failing to approve a measure to ease high unemployment and Republicans accusing Obama's party of trying to raise taxes that would kill jobs.

'Republican obstruction'

Obama, campaigning in Florida, said the vote was not the end of the fight for the measure.

In a statement after the vote, Obama accused Republicans of obstruction and said he would work with Harry Reid, the senate majority leader, to make sure that individual proposals in the bill would get a vote as soon as possible.

"Ultimately, the American people won't take 'no' for an answer. It's time for congress to meet their responsibility, put their party politics aside and take action on jobs right now."

Obama says the plan, which is more than half the size of his 2009 economic stimulus measure, would be an insurance policy against a double-dip recession and that continued economic intervention is essential given slower-than-hoped job growth.

The US unemployment rate has been above nine per cent since May and almost 45 per cent of the 14 million jobless Americans have been out of work for six months or more.

Tuesday's vote played out as disaffected crowds continued to occupy Wall Street, a square in Washington DC and parts of other cities around the US in protest against income inequality and related issues.

Source: Agencies