A revolt within the opposition Liberal Party means a key deadline for the Senate to pass the legislation has been missed.
Liberal leader Malcolm Turnbull had agreed with Prime Minister Kevin Rudd to pass the scheme in the Senate, where the government is in a minority.
If the Senate fails to pass the scheme, Mr Rudd can call a snap election.
That could be an appealing option, as he would be expected to win by a very big margin, seriously damaging the Liberals.
The Senate adjourned on Friday - its last scheduled day of business in 2009 - but agreed to return on Monday to continue debate on the package of 11 bills.
There have been mass resignations from the opposition front bench, and the party is in open and angry rebellion.
With a series of mass frontbench resignations on Thursday, and an open challenge from Tony Abbott, a senior party figure, even his supporters now concede that Malcolm Turnbull is political roadkill
Nick Bryant, BBC News, Sydney
Mr Turnbull said he would not stand down as leader. He warned that failure to support the climate change bill would consign the Liberals to the political wilderness.
"We would be wiped out," he told Australian radio. "The vast majority of Australians want to see action on climate change.
"If this legislation is knocked back, Kevin Rudd will have no choice but to go to a double dissolution election. This is a fundamental plank in his platform."
But that argument has not carried any weight with a strong rump in his party who reject the scientific case that man is contributing to global warming, says the BBC's Nick Bryant in Sydney.
One leading climate change sceptic and senior party figure, Tony Abbott, has said he will challenge Mr Turnbull for the leadership on Monday.
CONSERVATIVES MUSTN'T LET THEMSELVES BE BULLSHITTED AND BULLDOZED BY THE AGW-ALARMISTS.
WE MUIST STAND UP FPOR OUR VALUES AND THE TRUTH - LIKE HOFFMAN DID IN NY'S 23CD.
CONSERVATIVES STOPPED AMNESTY IN THE USA AND MIERS AND THE DUBAI PORTS DEAL. WE AR STOPPING OBAMACARE - AS WE STOPPED HILLARYCARE.
WE CAN DEFEAT THE STEALTH SOCIALIST AGW AGENDA THEY CALL CAP AND TRADE.