Some 22 Conservatives defied party orders and voted for a Labour amendment to the victims and prisoners bill, according to the division list. The change narrowly passed by 246 votes to 242, but a defeat for the government is rare given the size of the Tory majority.
Tory rebels included former ministers Robert Buckland, Damian Green, Andrea Jenkyns and Chloe Smith.
An independent inquiry into the scandal was set up in 2017 to look into why thousands of people were given infected blood in the 1970s and 1980s and whether there was a cover-up.
More than 3,000 people have died after developing HIV and hepatitis C in one of the worst scandals in NHS history.
Victims or the bereaved partners of victims are eligible for payments of around £100,000. But the government has been under pressure to expand the compensation scheme to include the parents and children of victims.
The inquiry was expected to publish its final report this autumn but the document will now be published in March 2024.
Ministers have suggested the position on further compensation was unlikely to change until the inquiry concluded.
Labour’s amendment called for an arms-length body to administer compensation to be established within three months of the legislation becoming law.
Moreover, interim compensation would be paid within a month to bereaved children, parents and siblings not covered by the first initial payment in October 2022.
Labour former minister Diana Johnson, who tabled the proposal, said: “I am very pleased that my amendment new clause 27 has been passed, despite government opposition.
“This will now put in law that a body will be established to pay compensation to those infected and affected by the contaminated blood scandal within three months of the Act passing.
“This is an important step forward in what has been an extraordinarily long fight for justice.
“However, it is not the end. There is still much work to be done to fully implement Sir Brian (Langstaff)’s recommendations and bring justice to those who do not have the luxury of waiting.”