Ministers have come under cross-party pressure to speed up compensation payments to businesses and households hit by the August riots.
Home Office minister Lord Henley said the Government was working closely with police authorities and insurers to ensure payments could be made "as quickly as possible".
But senior Liberal Democrat Lord Clement-Jones complained at question time that thousands of households and businesses were still waiting for compensation from police authorities.
He said: "Some £3,500 has been paid out from the £200 million or so claims and many valid claims are being contested.
"This is quite unacceptable. Will the Home Office issue firm guidance to police authorities to speed up the processing of claims and stop them hiding behind technicalities."
Lord Henley said he accepted "things haven't been as speedy as they should have been".
He said it was estimated that some 5,000 claims totalling up to £250 million had been received.
But these included claims that were not covered by the Riot (Damages) Act 1886 and ministers had to ensure only valid claims were met.
Former Metropolitan Police commissioner Lord Imbert (crossbencher) said the Act was passed for a "different society than we have today" and was now "anachronistic, outdated and unfair".
Lord Henley said the Act was "possibly past its sell-by date" but the Government had made clear it stood ready to provide financial support to police authorities.