Review of Lords powers to follow tax credit Government defeat

A review of the conventions surrounding the House of Lords is likely to be announced by Downing Street, following the peers' rejection of the proposed £4bn cuts to tax credits as part of the Government's welfare reforms.

An amendment delaying the cuts until their impact has been analysed by the Institute for Fiscal Studies and the Government considers "mitigating action" in response, was passed against the Government by 307 votes to 277; and a further motion to provide full transitional protection for at least three years was passed by 289 to 272.

Prime Minister David Cameron and Chancellor George Osborne, along with many of their backbenchers, believe the upper House has acted unconstitutionally in voting down a finance measure approved by the House of Commons, for the first time since the Parliament Act of 1911 gave the Commons power to override the Lords. However opponents argue that the measure was a welfare one and that the Conservatives' election manifesto was insufficiently specific on the issue for them to claim the mandate of the electorate.

The controversy has created the unlikely spectacle of the Conservatives attacking the position of the unelected chamber, while opposition parties defend its right to intervene in what it sees as the public interest.

The Government's proposals, aimed at tackling the budget deficit, would see some low income families lose up to £1,300 a year, which ministers argue should be made up by higher pay as well as by raising the income tax threshold.

Mr Osborne has promised to provide details of the transitional relief in the Autumn Statement, scheduled for 25 November. Labour has called for an immediate statement on what he plans to do next.