The Government's controversial "bedroom tax" which proposed to cut housing benefit for families deemed to have spare space in their homes has been voted down in the House of Lords.
Peers voted for an amendment by Lord Best which called for the cut not to apply to families who have one extra bedroom or those who are unable to move, by 258 to 190.
During the debate welfare reform minister Lord Freud said the government had not made choices about housing benefit "lightly", telling peers: "I assure noble Lords these decisions have not been taken lightly."
Among those who voted against the government were 14 Lib Dem peers including Baroness Tonge who has voiced her dissatisfaction with the coalition.
Former speaker Baroness Boothroyd also voted against the government, alonside one Conservative, Lord Newton of Braintree.
Experts had warned it would have "disastrous" consequences for families and foster carers.
In a blog for the Huffington Post UK on Monday, the Chief Executive of the National Housing Federation (NHF) David Orr says nearly three-quarters of a million families deemed to have a spare bedroom could be £676 a year worse off under plans to dock their housing benefit.
"This bedroom tax will have disastrous implications for a huge number of people already struggling to make ends meet in this tough economic climate, including grandparents, disabled people and smaller families," he wrote.
Labour shadow work and pensions secretary Liam Byrne said: “We've always said that we support housing benefit reform, but the botched way this government is setting about it risks costing more than it saves. I hope this cross-bench amendment will force the government to think a little harder about a sensible way forward.”