The government was left reeling after the Lords defeated it for the fifth time on the bill to change the electoral system for next year's European elections.

Earlier, Prime Minister Tony Blair told MPs the issue was no longer about voting rights but Tory hereditary peers defying elected MPs.

After the Lords voted against the government, Baroness Jay announced the bill had been lost and that next year's Euro-elections may have to be held under the old first-past-the-post system.

The bill will be re-introduced afresh after next week's state opening of parliament, and the Parliament Act will be used to ensure its passage.

A Downing Street spokesman said: "This vote underlines once more an overwhelming case for reform of the House of Lords.

William Hague: Independent opinion is against the bill

"The truth is that the Tory hereditary peers can be wheeled out on any day of the week on any issue to defeat the democratically-elected government."

During the debate, some peers warned the Opposition against walking into a trap as the government would use the defeat as an excuse in its attempts to reform the Lords.

The Downing Street spokesman added: "The three-to-one inbuilt majority for the Tories is a democratic disgrace.

"The government will deal with it by removing voting rights of hereditary peers. In the meantime we remain absolutely determined to fulfil our manifesto commitment on PR for the European elections.

"Even with the use of the Parliament Act it will only be possible to get that system in place with the co-operation of the Opposition and it is now perfectly clear there is no limit to their game playing."

A rowdy exchange over the "in-built Tory majority" in the House of Lords

During a heated Prime Minister's Questions earlier on Wednesday, the prime minister said the battle had come down to Tory hereditary peers versus an elected House of Commons.

"It is not just the fact that hereditary peers can decide policy in the House of Lords," he said.

The "inbuilt Tory majority", he said, was "three-to-one in the House of Lords, that means whatever the election result they can use the House of Lords to over turn the will of the House of Commons. That is not democracy".

Tory leader William Hague hit back by asking the prime minister how many of his own backbenchers had voted for the closed list system - a question Mr Blair failed to answer..

The Lords defeated the government for the fifth time

Mr Hague said: "All independent opinion is against a voting system which denies the voter the right to vote for a candidate they prefer."

He said Mr Blair's government was extending the powers of a "clique of cronies" and overriding every constitutional check and balance.

The prime minister replied the proposed "closed list" system was already in use in many major European countries.

He insisted: "This is however no longer about the system, it is about hereditary Tory peers in the House of Lords.

The row is about voting in European elections

"If I can give the right honourable gentleman some advice - as I know he is in need of an image consultant - he should not wrap himself in the ermine of heredity peers."

He went on: "When it comes to democracy, the Tories prefer hereditary peers to the will of the people."

Speaking after peers voted the bill down, Liberal Democrat leader Paddy Ashdown said the Lords had "frustrated the will of the elected chamber five times and denied the voters of Britain a fair voting system for which two thirds of them voted at the general election".