The Government suffered a defeat over its welfare reform proposals tonight as peers supported a move to exempt child benefit from the £26,000 benefits cap.
Peers voted by 252 to 237 in favour of an amendment introduced by the Bishop of Ripon and Leeds, the Rt Rev John Packer, which received Labour backing.
He said: "It cannot be right for the cap to be the same for a childless couple as for a couple with children. Child benefit is the most appropriate way to right this unfairness."
And he argued that, in effect, the cap denied child benefit payments to people whose other benefits had reached £500 a week.
"This cap is not simply targeted at wealthy families living in large houses," he said. "It will damage those who have to pay high rents because often that rent has increased substantially in the course of their occupancy of that house."
The defeat was the fifth the Government has received on the Bill, including three on one day earlier this month.
But ministers saw off a Labour-led move earlier today to exempt families threatened by homelessness from a benefits cap by 250 votes to 222, majority 28.
The Government is facing a concerted attack from Labour peers, Church of England bishops and some Liberal Democrat rebels who want concessions.
Former Liberal Democrat leader Lord Ashdown warned yesterday that the plans to cap benefits were "completely unacceptable" in their current form.