Peers threw out a "fatal motion" brought by the Liberal Democrats which would have totally stopped the £4.4bn cuts to tax credits by 310 votes to 99. They will now vote on second of four motions – whether to delay the changes and revise the controversial changes. The Labour and crossbench motions would delay the cuts and ensure full compensation for those affected for at least three years.
Baroness Stowell asked the House of Lords to reject the three motions, saying the squeeze on tax credits should not be treated "in isolation" but was part of the government "economic strategy and vision for the country".
She said Chancellor George Osborne would "listen very carefully" if a separate motion of regret put forward by Church of England bishops, which would not block the cuts, was passed by the Lords.
However former Conservative Chancellor Lord Lawson urged "tweaks" to the policy to reduce the "financial harm" to those on the lowest incomes, saying "it is not just listening which is required but change".
Only five times have the House of Lords voted against motions brought by House of Commons, particularly on financial matters.