Lords have voted for a Parliamentary check before councils are forced to give the money raised from the sale of high-value council homes to government.
Peers voted in favour of an amendment to the controversial Housing and Planning Bill.
The Government said it was considering making several concessions to the Bill, including a like-for-like replacement of all council homes sold under Right to Buy and the protection of high-value homes in rural areas.
Shadow housing minister John Healey said the latest defeat showed the Government's housing plans were not ‘fit for purpose'.
He said: ‘It's become clear to peers across the House of Lords that this government has no proper plan to fix the housing pressures people face.
‘The proposals debated will mean a severe loss of low-cost homes at a time when they've rarely been needed more.
‘Ministers have lost all credibility with this half-baked Bill.
‘It's welcome they have backtracked on some areas, but they must now urgently come back to Parliament with improvements that safeguard affordable homes for the next generation.'
