The Government suffered a fifth defeat in the Lords today over its plans for compulsory identity cards.

Peers backed an amendment by Lord Armstrong of Ilminster, a former Cabinet Secretary who sits as a crossbench peer, for a system that allows citizens to opt out of the scheme. Voting was 219 to 191, a majority of 28.

Tories, Liberal Democrats and some crossbenchers defied a warning from Baroness Scotland of Asthal, a Home Office Minister, that rejecting the will of the Commons could have serious consequences for the future of the Lords. Lady Scotland said: "When we trespass in such a way that we challenge the high regard in which we are held then I do tremble for us...

"We do not have the right to hold up legislation in a way that’s improper. There will be those who will use this opportunity against this House."

She said that Lord Armstrong's amendment would "blow a hole" in the legislation, putting "a coach and four through the Bill".

Lord McNally, the Liberal Democrat peers’ leader, replied that the Royal Commission on Lords reform headed by Lord Wakeham "said the Lords’ powers should be exercised with restraint and when the occasion clearly demanded it".

He said the report added: "Our conclusion is that the current balance is about right and should not be radically disturbed. It would be wrong to move in the direction of a basically unicameral system with the second chamber able to play only a revising role."

Lord McNally told Lady Scotland: "The judgment of when we reach that point, unless you are in favour of a unicameral Parliament, is a matter for each Member of the House, not for ministers."

Baroness Anelay of St Johns, for Tories, said however that Lord Armstrong had produced "a very helpful and honourable way forward to achieve a compromise of seeking to resolve this matter". She added: "I am not going to get involved in market gardener bartering across the Chamber. It would be to demean this House and I value it too much."

As the parliamentary "ping pong" continues, the Bill returns to the Commons tomorrow.

Tonight’s vote has fuelled speculation that the stand-off between MPs and peers could lead to an all-night sitting tomorrow, unless one side gives way. Charles Clarke is reported to have warned that he would keep the Lords up all night tomorrow if they continue to block the legislation.

Mr Clarke originally indicated that the Bill could "ping-pong" between the two Houses for months but his patience is now reported to have run out.

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