Falconer's plan for elected peers by 2007

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A partly elected House of Lords could be in place within three years after Lord Falconer of Thoroton promised yesterday to make a modernised second chamber one of the first acts of a Labour third term.

Ministers are prepared to use the Parliament Act to force through plans for a slimmed-down and restructured Lords within months of winning the next general election.

Support in the Cabinet is growing for the proposal, championed by Lord Falconer, the Secretary of State for Constitutional Affairs, and Peter Hain, the Leader of the Commons. It would comprise a hybrid house, with up to 80 per cent of the membership elected from regional lists based on the parties' share of the vote at each general election.

The remainder would be chosen by an independent appointments commission to retain non-partisan members.

Legislation is likely to include moves to limit the powers of the Lords to frustrate ministers by delaying laws and reform the procedures of the upper house.

The pledge from Lord Falconer, speaking at the Labour Party conference yesterday, represents a victory for the party's grass roots, which has been pressing for a democratic second chamber after attempts to introduce a largely elected house floundered in March.

He told delegates that Lords reform was "unfinished business", adding: "We will continue to reform the House of Lords. It is a priority for this government, and if we are returned to office in the next general election we will move as quickly as we can to reform the House of Lords, once and for all early in a third term.

"We need between now and the preparation of our manifesto to identify a solution which makes for a representative chamber, and then commit ourselves to in the manifesto."

Government sources said cabinet ministers were increasingly favouring the so-called "Billy Bragg option". Under this, the country would be divided into regions, each of which would send representatives to the new House of Lords, based on the share of the vote.

Tony Blair is said to be "persuadable" on the issue, although the Chancellor, Gordon Brown, remains unconvinced.

Delegates at the conference won applause as they demanded a move to an elected second chamber.

Pat Hetherton, a delegate from Unison, said: "We know what we don't want - hereditary, unelected Lords. It has to be more representative and democratic.

Delegates dropped demands for a vote on a motion for the voting age to be dropped to 16.