David Blunkett, the Home Secretary, was forced last night to scrap plans for a new offence of incitement to religious hatred as the price of saving his emergency anti-terror Bill.
He dropped the contentious proposal after it was thrown out for the second time in a week by the House of Lords this time by a majority of 113. Tory, Liberal Democrat and crossbench peers joined to reject the religious hatred clauses. Critics said the law had not been properly thought through and would strangle free speech.
With the threat of the Anti-terrorism, Crime and Security Bill shuttling between the Commons and Lords through the night, Mr Blunkett also made other concessions designed to get the Bill on the statute book by Christmas after the Lords inflicted three fresh defeats on the Government.
Mr Blunkett accepted an opposition amendment to restrict retention of communications data to cases where national security is thought to be at risk. And the parties agreed a deal that the effectiveness of the anti-terrorism legislation would be reviewed in two years' time by a committee of senior MPs.
A spokesman for Mr Blunkett said: "We firmly believe the UK will become a safer place as a result of this Bill becoming an Act within the next 24 hours."
Simon Hughes, the Liberal Democrat home affairs spokesman, said: "It's a scandalous way to pass legislation but, given the circumstances, the Bill is hugely less dangerous than it was two weeks ago."
Mr Blunkett told MPs: "Coming from Sheffield, I am familiar with the old nursery rhyme about the Grand Old Duke of York. I have marched myself to the top of the hill and I'm about to march myself back down again."
MPs on all sides cheered as he added: "I'm going to ask the House to give way to the House of Lords, who have voted twice to remove the incitement to religious hate."
He said that the public "would never forgive us if we were engaged at this stage in party political wrangles".
The Home Office said there was no plan to reintroduce the religious hatred provision duing the remainder of the parliamentary session.
It had been drawn up in reaction to complaints from Muslim groups that they had suffered an upsurge in attacks and abuse since 11 September.
However, the Home Office insisted it would not give way on another issue on which it suffered defeat in the Lords, on extending the jurisdiction of the Ministry of Defence and British Transport police forces. The Lords was expected to back off from confrontation on this as a trade-off for the concessions.
Oliver Letwin, the shadow Home Secretary, said: "We backed the need for emergency legislation throughout, but we were deeply concerned about those aspects of the Bill which bore little or no relation to the terrorist crisis and which undermined fundamental civil liberties."