Backbench Tory rebels' bid to scupper the government's Lords reform proposals appear to have succeeded, after a report suggested David Cameron is ready to drop the proposals for good.
The Telegraph newspaper's report that the reforms have been shelved is likely to trigger further dissent within the coalition, as Liberal Democrats have viewed the reform as a fundamental part of their policy agenda.
Plans to replace the existing Lords with an 80% elected second chamber had sparked a massive rebellion among Conservative MPs worried about the primacy of the Commons.
Ninety-one opposed the Lords reform bill in its second reading debate, meaning the legislation only passed because of opposition support.
It was Labour's decision to oppose the critical programme motion limiting the time the bill could take on the floor of the Commons which proved critical, however. Once it became clear government whips could not pass the motion it became clear the bill was unlikely to survive unchanged.
Initially coalition leaders had hoped to persuade Tory rebels to back a slimmed-down version of the plan which saw the remaining hereditary peers axed. Now even that seems to have been abandoned.
Tory right-winger John Redwood called for Lords reform to be replaced with a "repeal bill" scrapping "vexatious laws and regulations".
"Now there's an idea that should appeal to ministers from both coalition parties, but I don't see them limbering up for it," he commented on his blog.
Instead Lib Dems are likely to have their disappointment at the failure of Lords reform muted by other political concessions in the coalition's midterm negotiations, which are expected to lead to a relaunch in the autumn.
Many in the coalition's junior party are likely to be deeply frustrated by the setback, however. Earlier this week the Earl of Glasgow, a Lib Dem hereditary peer, complained that defeat would make the Lib Dems look "rather foolish".
"I don't think it's going to get through," he said.
"It's going to be another constitutional humiliation for Nick Clegg and, therefore, the party."
Chris Rennard, the former Lib Dem chief executive and another of the party's peers, insisted that there was "no substitute for democracy" but accepted that party leader Nick Clegg needed to regroup quickly.
"What Nick will need to do as deputy prime minister is to show what a difference the Liberal Democrats have made and why a majority for either Conservatives or Labour at the election would be a disaster," blog Lib Dem Voice quoted him as saying.
Conservatives accept their opposition to Lords reform could cost them another of the coalition's constitutional changes - the reduction in the size of the Commons from 650 to 600 MPs and equalisation of constituency sizes.
The move is expected to give the Tories around an extra 20 MPs but hurt Labour and the Lib Dems. Senior Liberal Democrats have already warned there will be "consequences" for boundary changes if Lords reform does not go ahead.