Labor and the LNP have joined forces to shoot down a senate inquiry into East Timor's controversial oil and gas project.

The Timorese government is wants to build a processing facility on its south coast, but does not have the money.

Crossbench senator Rex Patrick has warned that Australia must do more to assist the Greater Sunrise project, or risk giving China a strategic boost.

“There is interest in Timor Leste from the Chinese as they expand their influence,” Senator Patrick told parliament.

Seantor Patrick said ignoring the issues would lead to Chinese military assets being established there.

“It is not in our interests to have a strong Chinese strategic footprint in this neighbouring country. Not in any way, shape or form,” he said.

He proposed an inquiry into how Australia could assist East Timor, but the plan has been defeated in the Senate 38 votes to 13.