Key independent senator Jacqui Lambie is expected to meet Tony Abbott on Wednesday to discuss a better pay deal for the military and jobs for Tasmania.

Senator Lambie, who quit the Palmer United Party this week, said she will not vote to pass government legislation until a defence pay deal – which delivers a cut in real terms – is improved.

• Lambie leaves a mess after escaping kennel

The prime minister told parliament on Tuesday he was keeping the pay issue “under close review”.

Senator Lambie wants an extra $121 million for defence personnel and the return of Christmas leave and travel entitlements.

The prime minister wants to end the parliamentary year on a high note by delivering more of his budget savings measures, which are being blocked in the Senate.

Senator Lambie is also keen to get more jobs and investment for her home state of Tasmania.

Mr Abbott met his Joint Commonwealth and Tasmanian Economic Council in Canberra on Tuesday to discuss ways to boost Tasmania’s long-term growth.

Crossbench senators are also negotiating with the government on changes to the renewable energy target, the GP co-payment and university fee deregulation.