Peers vote down Government Bill
Peers defeated the Government on plans that churches argued would restrict their ability to deny jobs to gay people and transsexuals.
The Government insisted provisions in the Equality Bill would maintain the status quo, but church leaders, including the Archbishop of York, argued that it would create confusion.
Peers voted by 216 to 178, majority 38, to strike out a section of the Bill which campaigners argued was drawn too narrowly.
The Archbishop of York, the Most Reverend John Sentamu, asked: "Where are the court rulings that have shown that the law is defective? If it ain't broke, why fix it?"