DUBLIN (AFP) - Irish voters narrowly rejected a plan to abolish the upper house of parliament in a surprise referendum result on Saturday that dealt a blow to Prime Minister Enda Kenny.

Mr Kenny had personally led the campaign to get rid of the senate, saying that it would save money for the bailed-out euro zone nation and reform a sclerotic political system.

Final results from Friday's poll revealed 51.7 per cent voted in favour of keeping the senate while 48.3 per cent wanted to scrap it.

Turnout was just 39.2 per cent with about 1.2 million voters.

Mr Kenny said he was "personally disappointed" but respected the outcome.

"Sometimes in politics you get a wallop in the electoral process," Mr Kenny told reporters outside Dublin Castle after the result was announced.

"I accept the verdict of the people." Opinion polls had suggested voters would likely back Mr Kenny's proposal to scrap the 60-member senate, or Seanad Eireann, which had the support of the coalition government parties and some of the opposition.

The prime minister had described the upper house as elitist and undemocratic, saying its closure could save the nation 20 million euros (S$33.8 million) a year.

Opponents said the senate, which was created in 1937, should be reformed instead of abolished.

Many Irish blame their country's politicians for failing to properly manage the "Celtic Tiger" economic boom, which ended in Dublin entering a European Union-International Monetary Fund bailout in November 2010 after a decade of growth collapsed.

Mr Kenny denied that the result was a blow to his political authority.

"It is not about parties, it is not about leaders, it is not about government because there wasn't a government campaign here," he said.

"It was the people's day and the people's decision and that's the people's absolute right and I think from that point of view this is the ultimate exercise in democracy." Voters also backed the creation of a new Court of Appeal in a separate referendum Friday. It passed by 65.2 per cent in favour to 34.8 per cent against.

Dublin hopes the new court will alleviate the pressure on the heavily back-logged Supreme Court.

Mr Kenny had taken many by surprise, even those in his own Fine Gael party, when he announced in the run-up to the last general election that he would put plans to scrap the upper house to the people.

He pointed out that other small EU nations had scrapped their upper houses to save money.

But critics accused Kenny's party of hiding behind a promise of savings to centralise power in the government's hands - and closing the door on wider political reform.

Historically, many senators tend to be politicians who failed to gain a seat in a general election or those hoping to win a seat in the lower house at a future election.

The upper house is the less powerful house of parliament, often reduced to rubber-stamping legislation from the lower house.

Its ability to delay bills passed by the lower house for 90 days is its most powerful function, but that has only occurred twice in 75 years.

The referendum vote came ahead of another austerity budget in Ireland on October 14, almost three years since it entered the EU-IMF bailout.

The IMF on Friday slashed its growth forecasts for Ireland after predicting weaker consumer demand and export growth.

The IMF, which formed a central part of Ireland's 85-billion-euro international rescue, said it expects the Irish economy to grow by 0.6 per cent this year, down from a previous forecast of 1.1 per cent.

Ireland's economy went through a period of turmoil in the run-up to the 2008 global financial crisis and after, amid soaring government debt, a property-market meltdown, a banking crisis and surging unemployment.

Ireland had been known as the "Celtic Tiger" economy for its double-digit growth spanning a decade from the mid-1990s.