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And, in further embarrassment for the Prime Minister, it emerged later that he did not vote in the second division - which the Government lost by just one vote.
The results, after a sizeable Labour backbench revolt, were greeted by loud cheers from the Tory benches and cries of “resign!”.
Home Secretary Charles Clarke quickly announced the Government was bowing to the Commons’ will and the Racial and Religious Hatred Bill would go for Royal Assent to become law as it stood.
“The Government accepts the decision of the House this evening. We are
delighted the Bill is going to its Royal Assent and delighted we have a Bill which deals with incitement against religious hatred,” he said, to Tory jeers.
Mr Blair suffered his first ever Commons defeat only two months ago when MPs voted down plans for a 90-day detention period under the Terrorism Bill and opted for 28 days instead.
Peers inflicted a series of defeats on the Racial and Religious Hatred Bill in a bid to safeguard freedom of speech with an amendment restricting the new offence of inciting religious hatred
to threatening words and behaviour rather than a wider definition also covering insults and abuse.
They also required the offence to be intentional and specified that criticism,
insult, abuse and ridicule of religion, belief or religious practice would not be an offence.
Ministers urged the Commons today to reject the Lords’ amendments and back instead a Government compromise. Home Office Minister Paul Goggins insisted only those intending to “stir up hatred” would be caught under the Government’s plans.
But in the first test of strength, MPs voted by 288 to 278, majority 10, to back the Lords. Mr Blair was recorded as voting with the Government line in this division, while 27 Labour backbenchers rebelled and at least two dozen others did not vote.
In the second vote, MPs voted by 283 votes to 282, majority one, to back the Lords. In this vote, Mr Blair was not recorded as having voted.
Further analysis of the first division showed more than 40 Labour MPs did not vote.
Of these at least 15 were Scottish MPs and it was believed they may have been campaigning for next week’s Dunfermline and Fife West by-election.

Sam Coates's blog about Westminster, politics and spin
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