But Prime Minister Anthony Albanese said the government would reintroduce the bill into the House of Representatives during the next sitting week in October in a bid to bypass the Greens' blockage and speed up another vote in the Senate.
The coalition believes home buyers don't want the government to be part-owners. (Mick Tsikas/AAP PHOTOS)
"We'll continue to argue our case," he told ABC Radio.
"There's no legitimate argument being put forward of why this legislation is not worthy of support."
Greens leader Adam Bandt said the policy would "push up rents and house prices for everyone" and called on Mr Albanese to come back to negotiating table.
"The time is ticking for the prime minister to stop bulldozing and let his ministers negotiate with the Greens to pass this bill," Mr Bandt said.
Help to Buy would give 40,000 first-home buyers access to cheaper deposits through a shared equity scheme with the federal government.
The Greens are also opposing the government's Build to Rent bill, which would provide tax incentives for developers who build new housing stock to rent out, rather than sell on.
Instead, they want the government to introduce a cap on rent increases, invest further in public housing and phase out negative gearing and capital gains tax incentives for property investors.
Max Chandler-Mather said Labor's policy would drive up house prices and lock out most renters. (Lukas Coch/AAP PHOTOS)
Greens housing spokesman Max Chandler-Mather said Labor's policy would lock out 99.8 per cent of renters and drive up house prices.
"Our message to Labor is simple: this does not have to be a fight. We're ready to work with you," he said.
Mr Chandler-Mather said Build to Rent, which is yet to be voted on in the Senate, would give tax breaks to developers to build expensive apartments they already planned to build.
Economist Saul Eslake agreed with the Greens' criticism that the Help to Buy scheme would result in more expensive housing rather than higher ownership rates.
But he criticised the Greens for "holding the government to ransom" by blocking the Build to Rent legislation.
"The Greens actually don't want the housing problems to be solved before the next election, because that's one of their principal issues for prising votes from the Labor party in inner suburban seats," he said.
Even if the new apartments encouraged by the scheme were more expensive, other apartments in the market freed up by people moving into them would become cheaper, Mr Eslake said.
Anthony Albanese did not rule out going to an early election over the housing stand-off. (Dan Himbrechts/AAP PHOTOS)
Mr Albanese has not ruled out dissolving parliament and calling an early election if the legislation fails to pass.
Housing Minister Clare O'Neil claimed the Greens had shown no real willingness to negotiate on Help to Buy.
"Help to Buy is an important piece of the puzzle that would change the lives of 40,000 Australians and their families," she said.
The coalition is also against the bill, with opposition finance spokeswoman Jane Hume claiming Australians will not sign up to give the government a "big chunk" of their home.
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