The Government's plans to axe tax credits were thrown into chaos tonight after the House of Lords voted twice to delay the controversial welfare crackdown.
Labour peer Patricia Hollis' motion to have a three-year transition for low-paid workers won by 289 votes to 272.
It followed another motion tabled by the cross-bench peer Molly Meacher to delay the cuts until ministers spelled out how they would help low-paid workers triumphing by 307 votes to 277.
However, a fatal motion, tabled by the Liberal Democrat peer Zahida Manzoor, that would have killed the cuts outright, failed by 310 votes to 99.
The vote represents an historic parliamentary moment with the unelected peers and Bishops sitting in the upper House voting against a key aspect of the Government's spending plan, one which had already been agreed in the House of Commons.
However, the leaders of the rebellion argued attempting to get the deep cut through via a parliamentary device called a statutory instrument gave them justification to act.
Commentators warned Britain was now embroiled in a constitutional crisis. As the Huffington Post UK revealed last week, ministers may consider suspending or stuffing the Lords with as many as 150 Tory peers in an effort to force through the policy.
The Government was last night defiant. A Downing Street spokesman said: "The Prime Minister is determined we will address this constitutional issue. A convention exists and it has been broken. He has asked for a rapid review to see how it can be put back in place."
Labour's Shadow Chancellor, John McDonnell, told Sky News that flooding the Lords would be an "outrage", adding: "I think there would be outrage in the Conservative Party as well because he would be threatening the ability of the House of Lords to amend and to express a view - something which I believe they are constitutionally entitled to do."
He added: "If he had put this in the Finance Bill, or if he had put this in the manifesto, there would have been no problems on the matter, but it wasn't in the manifest and in fact the Prime Minister and the Chief Whip Mr Gove both promised people that this wasn't happening.
"Now I think people were offended by that and felt that they had to do everything they possibly could to ask George Osborne to think again. That's all we're asking him to do."
Conservative MP Heidi Allen's Commons speech last week slamming the policy was seen as a watermark on Tory disquiet over a policy that hits workers, who the party has made great pains to argue it supports.
Last night she said the Lords were "right".
Labour MPs reacted with delight.
TAX CREDITS: THE IMPACT
Tax credits are welfare payments to families raising children and working people on low incomes.
More than three million families will lose an average of £1,300 a year from April
The cuts will deliver £4.4bn of the Chancellor’s planned welfare cuts by reducing the earnings level at which tax credits start to be withdrawn from £6,420 to £3,850.
The Government says eight out of 10 would be "better off" overall from a package which also includes increases in the minimum wage for over-25s, rises in the income tax threshold and extended free childcare.
During the debate, the Bishop of Portsmouth told peers that George Osborne's plan was "morally indefensible", and Baroness Patricia Hollis detailed how families are "terrified", adding: "Those families believed us when we all said that work was the best route out of poverty."
Margaret Thatcher's former Chancellor, Lord Nigel Lawson, admitted he was "torn" over whether to support his party, warning of the "great harm" to the poorest the cuts will cause.
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