The Government tonight decided not to try to force through the defeated plan to extend from 28 days to 42 the limit for pre-charge detention of terror suspects.
The Home Secretary Jacqui Smith announced to the House of Commons that she had prepared an alternative to the Bill, which was overwhelmingly rejected in the House of Lords by 309 votes to 118 after an impassioned debate. The Counter Terrorism Temporary Provisions Bill which would be held ready and introduced if needed. This move was interpreted by the Conservatives as an abandonment of the Bill.
Tony Blair suffered his first Commons defeat over a bid to extend detention to 90 days in 2005. Parliament agreed instead to a 28 day limit.
Mr Brown's attempt to extend that to 42 days scraped through the Commons by just nine votes in June, despite a rebellion by 36 Labour MPs.
The Government had to rely then on the votes of Democratic Unionists.
The huge scale of tonight's Lords defeat will make Home Secretary Jacqui Smith wary of trying to force the measure through the Commons again.
And even if she did, there's likely to be a prolonged period of "ping-pong" with peers before Mr Brown would have decide whether to use the Parliament Act to ram the measure through the Lords.
The latest bid to extend pre-charge detention for terror suspects was rejected by a coalition of Tory and Liberal Democrat peers and Labour rebels.
They backed a move by crossbencher Lord Dear, a former chief inspector of constabulary, to bar any extension beyond 28 days in the Counter-Terrorism Bill.
Lord Dear, opening committee stage debate, said: "This attempt to appear tough on terrorism, I believe, is a shabby charade which is unworthy of a democratic process and we should reject it."
He argued there was "no evidence to date" that the existing 28-day limit had been insufficient and that no other common law democracy had a limit as high as 42 days.
The Association of Chief Police Officers backed the increase, he conceded. "But I have had numerous chief constables telling me privately that they see no reason for the extension and that privately they do not support it."
Lord Dear poured "scorn" on the "Byzantine" safeguards, which gave Parliament a quasi-judicial role in authorising an extension in individual cases. There were "grave risks of breaching sub judice arrangements, he warned.
To extend to 42 days, he warned, "would almost certainly give ammunition to those who seek to justify acts of terrorism against us. I think it would be an act of sheer folly to provide them with such a gift."
Tory frontbencher Baroness Neville-Jones - former chairman of the Joint Intelligence Committee - condemned the Government's plans as "unnecessary, undesirable and unworkable".
The proposed safeguards made it "unworkable and constitutionally worrying," she said.
"They risk conflating the roles of Parliament and the judiciary. They will place on Parliament demands to act in a quasi-judicial manner."
Lib Dem frontbencher Lord Thomas of Gresford QC warned the extension could lead to a "drying up of intelligence" from the Muslim community.
The Government was using the judiciary as "a convenient cover to give an aura of respectability to what is essentially executive detention".
Labour QC Lady Mallalieu said: "It surely is an essential ingredient of living in a free country that we are free from the fear of being locked up without charge."
Tory former Cabinet minister Lord Tebbit, who was seriously injured and whose wife was permanently disabled in the IRA's bombing of the Grand Hotel in Brighton during the 1984 Conservative Party conference, said he was backing the Government's plans and warned his party might "come to rue this day" if ministers lost the vote.
"If the lack of this provision leads to the police to fail to prevent a major terrorist outrage, what then?" he asked. "It might mean multiple fatalities, it might mean a strike against economically important infrastructure, with great consequences.
"It might mean we fail to prevent an outrage as great as the detonation of a dirty nuclear device in a city centre, leaving it uninhabitable for years."
Labour former Lord Chancellor Lord Falconer of Thoroton said he would vote against the Government, telling peers: "If I thought that this provision for 42 days would make any difference at all in the fight against terrorism I would unhesitatingly support it."
Liberal Democrat Lord Carlile of Berriew, the independent reviewer of terrorism legislation, said that if 42-day detention had an adverse impact on civil liberties it would be on "a maximum of five or six people in the next four or five years", adding: "This is not the end of civil liberties as we know it."
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