by politics.co.uk staff
The Lords have voted down three amendments to the equality bill, which campaigners said would prevent churches from denying jobs to gay people.
Ministers insisted they intended only to clarify the existing bill, but in a series of well-attended votes, Lords rejected their arguments.
The first vote had a majority of 38, followed by 21 and then seven.
Both sides claimed to be preserving the status quo, but peers were unconvinced by government arguments that its exemptions to equality law for people whose jobs were "wholly or mainly" concerned with services or rituals would fail to hit religious groups.
Most clergy spend only some time conducting spiritual activities, according to activists, and much of the rest of the time carrying out administrative functions.
Current law allows churches to reject candidates on the grounds of gender, sexuality or marital status - an exemption the government says it is committed to.
Religious figures in the Lords argued that if the government accepted the current state of play there should be no need for its amendments.
"Where are the examples of actual abuses that have caused difficulties? Where are the court rulings that have shown that the law is defective? If it ain't broke, why fix it?" asked John Sentamu, the Archbishop of York.
Lords leader Baroness Royall said the amendments were designed to clarify the equality bill.
"We recognised that there was a need for further clarification and that is precisely what this amendment seeks to do - to clarify, not to change," she said.
"The government's intention is not, and never has been, to narrow the scope of the exception."