The Liberals' plan to open up 356,000 hectares of Tasmanian forests for logging has been defeated in the state's upper house.

The government claimed the proposal would head off job losses in the timber industry.

"This is a critical Bill for the fate of the forest industry and for jobs in Tasmania," said Leader of the Government in the Upper House Leonie Hiscutt.  "As we have heard directly from small sawmills and the special species timber sector, if this Bill passes and their industry has access to more wood, new jobs will be created."

But Members of the Legislative Council didn't buy with seven MLCs voting against the proposal and five in favor.

This was welcome news to the Wilderness Society:  "We offer thanks to the MLCs who saw no logic in this legislation and led the debate against what is widely acknowledged as a divisive and politically motivated piece of legislation," said spokesman Vica Bayley.