Theresa May's Conservative government faces defeat in the House of Lords after it refused to secure the rights of EU citizens living in the UK.

The Lords wanted a clause in the bill to trigger Article 50 to ensure that Europeans already in the UK will have the same rights to live and work here after Brexit.

However, after Home Secretary Amber Rudd said the Government would be unable to go further than give the verbal assurances already given, a majority of peers are ready to back a Labour amendment to ensure rights are protected within the first three months of Brexit being triggered.

In a last-ditch effort to convince peers not to back the amendment, Rudd has penned a letter to the House of Lords in which she outlined that the Government plans to treat EU citizens with the utmost respect.

"That's why we will be making securing their status a priority as soon as we trigger Article 50 and the negotiations begin," she said.

Rudd added: "A unilateral move by the Government to address the issues facing EU nationals in the UK, however well intentioned, will not help the situation of the hundreds of thousands of our own citizens in the EU."

However, in response Labour's leader in the House of Lords, Baroness Angela Smith, told the Independent: "To continue to use people as bargaining chips in this way is not only shameful but could have a dire impact on the UK's economy and essential services.

"Confirming the rights of those EU citizens living in the UK can only be of benefit to our citizens worried about their future in EU countries but the Government's approach seems to be to sit back and wait for others to blink first."

The stand-off will take place on Wednesday (1 March) and peers from Labour, the Liberal Democrats and the Conservatives have indicated they will support the amendment.

A Labour Lords source told the Guardian it is highly unusual for peers to force a vote on legislation at this stage, as usually they would hope to keep pressing the government for further concessions.

"A committee stage vote in the Lords is as rare as a white rhino," he said. However, he added that it is inevitable as "it is clear that we have exhausted the deliberation and dialogue with the government and we would be wasting our time to have the debate again at report stage. This needs to go back to the Commons to be debated."