David Blunkett's police reform plans suffered a setback last night when the Lords threw out proposals to give home secretaries the power to intervene in failing forces.
The Home Office vowed to press ahead with the moves, which it said were essential to improve police standards, despite defeat by a bigger than expected majority of 74.
A package of Home Office concessions to its Conservative and Liberal Democrat critics failed to satisfy opposition complaints that the proposals could politicise the police service.
The defeat, by 205 votes to 131, came during the report stage of the Police Reform Bill. The vote will have to be overturned in the Commons.
Lord Dixon-Smith, the Conservative Home Affairs spokesman, said the Home Office was attempting to take the "central administration of what are essentially local services too far". He said: "There is nothing that can be done from an office in Whitehall, which will affect things dramatically on the streets."
Lord Dholakia, for the Liberal Democrats, said the government proposals would have "serious and unwelcome ramifications for local policing".
Lord Rooker, a Home Office minister, insisted the new laws would only give a Home Secretary the powers to intervene as a last resort. "[The Bill] would not enable any Home Secretary to operate on a whim or a hunch." Among the compromises agreed by Mr Blunkett in an attempt to push the Bill through the Lords was to give police authorities, which oversee the running of forces, a greater say in any attempt to have a chief constable sacked.
Mr Blunkett had also proposed to allow teams of inspectors or "hit squads" to take over the running of failing police divisions. Under the amendment, the Home Secretary would have to provide evidence of where the divisional commander was failing and give the chief constable a chance to improve.
The third change would mean that the HM Inspector of Constabulary would have to agree on which areas of police procedure need national regulations. The Home Secretary would not be able to make the decision on his own. A Home Office source said: "We are not watering down the powers. Instead we have made the details more explicit and introduced safeguards."
Sir David Phillips, the president of the Association of Chief Police Officers, welcomed the amendments.
Whitehall sources said Mr Blunkett would not abandon plans to allow forces to hire civilian patrol officers with the power to detain suspects.