The revamped House of Lords effectively killed off the Criminal Justice (Mode of Trial) Bill when Peers from all sides - including Labour - voted by 222 to 126 against it.
This is thought to be the first time a mainstream bill has been killed off before it reached the elected house: since the measure was introduced in the Lords, the Government cannot "steamroller" it into law under the Parliament Act.
The Home Secretary, who described critics of the bill as "woolly Hampstead liberals" immediately pledged to introduce a new bill in the House of Commons.
He said: "It is now crystal clear that a majority in the House of Lords is determined to prevent the elected House of Commons from making timely decisions on this measure. We are therefore introducing a No 2 Bill in the House of Commons as soon as possible in this session of Parliament." The Bill, designed to save the Government £105 million by removing a defendant's right of to opt for a Crown court jury trial on some charges, has been fiercely criticised by lawyers and pressure groups who claims it is fundamentally flawed and unjust.