The UK Government has lost in the House of Lords over its attempt in the Equality Bill to alter the law on who churches and other faith-based groups can employ in ways the Churches believe will be detrimental to religious freedom.

Peers voted 216 to 178 in favour of Lady O’Cathain’s amendment to keep the current law unchanged.

But in two further votes Lady O’Cathain won by 195 votes to 174 and by 177 votes to 172.

In the debate before the votes, the Government claimed its plans would simply ‘clarify’ the law.

But Churches said the plans would narrow important safeguards designed to help religious employers defend their ethos.

The Government’s defeat means no change to the current law, which permits churches and other faith-based employers to protect their ethos by insisting staff live consistently with the religion’s doctrine on sexual behaviour.

At this stage it is not known whether the Government will try to overturn the defeat in the Commons.

Miss Harman could try to force the measure through the Commons – and risk losing the whole Bill because of the short amount of time left in this Parliament.

The Archbishop of York, Dr John Sentamu, said during the Lords debate: “You may feel that many churches and other religious organisations are wrong on matters of sexual ethics.

“But, if religious freedom means anything it must mean that those are matters for the churches and other religious organisations to determine for themselves in accordance with their own convictions.”

He added: “Where are the examples of actual abuses that have caused difficulties? Where are the court rulings that have shown that the law is defective? If it ain’t broke, why fix it? 

At the weekend Church of England Bishops expressed deep concern about the Government plans.

The bishops said the Government has produced words that “create difficulties for churches and religious groups”.

They added: “This despite our raising the problem many months ago and offering various ways of resolving the issue.”

Bishops of the Roman Catholic Church have also opposed the Government proposals.

Most Revd Peter Smith, Roman Catholic Archbishop of Cardiff, voiced his regret at the Government’s refusal to “sit down earlier with religious groups and work out an amendment with the right wording”.

He continued: “As it is, legal advice indicates that a court might construe the wording too narrowly and if there was a doubt about the legal effect then the only prudent course is to support the rival amendment which deletes the definition entirely.

“That is the only sure way of guaranteeing this Bill neither widens nor narrows the scope of the current exemption.”

Ahead of tonight’s vote a Government spokesman said: “The Equality Bill will not change the existing legal position regarding churches and employment.

“It simply clarifies the current law to ensure a balance is maintained between the rights of people to manifest their religion and the right of employees not to be discriminated against.”

However, the Lords opposed the Government plans and voted to keep the present law unchanged.

Baroness Sayeeda Warsi, the Conservatives’ shadow minister for Community Cohesion, hailed the vote as a “victory for common sense”. 

She said: “We delivered a blow against the governments attempt to narrow the definition of ‘employment’ for the purposes of religion.

“The Church of England, the Catholic Church and leaders of other faiths have all campaigned together in a true spirit of Community Cohesion to protect an important religious freedom.”

Lady Butler-Sloss, one of Britain’s longest serving senior judges, told peers the Bill would restrict “the rights of religious groups to work with those of the same views and same religious convictions and it will, if passed, create the confusion it seeks to avoid.”