The House of Lords has overturned a Government defeat in the Commons last month and restored the missing section of the Education Bill which allows grant-maintained schools to expand by 50 per cent without permission from the Secretary of State.

The clause was defeated twice in the Commons - once at committee stage when two Tory MPs missed the vote, and again at the report stage when the vote was lost due to a miscount by the Tory Whip - it should have been a draw.

The vote of 171 to 127 taken in the Lords on Tuesday night will restore some confidence in the Government’s ability to control its troops and see the Bill through Parliament before the election.

But the Conservatives are still left with the problem of reversing an embarassing defeat inflicted by a coalition of Opposition peers on Monday. Tory whips were caught napping and an amendment passed (by 111 to 94) which would effectively wreck the thrust of the Bill. The defeat was particularly surprising coming so soon after the Commons ambush.

The amendment, backed by Lord Morris (Labour), Lord Tope (Liberal Democrat) and Baroness Warnock (cross-bencher) would mean that if any school wants to increase selection, it must consult parents and governing bodies of every school that might be affected by the decision, or “other persons as appear to the admission authority to be concerned”.

If more than a certain number of objections are registered within two months, an independent public inquiry must be called and a report prepared.

This strikes at the heart of the Bill and Tory education policy because it acknowledges that no school is an island; that if one school decides to become more selective there are inevitable knock-on effects on the quality of neighbouring schools. If one secondary wanted to increase the number of pupils it selects, all local secondaries and their feeder primaries could object, precipitating a lengthy and expensive inquiry. The selection clauses of the Bill allow GM schools to select 50 per cent of pupils, specialist schools 30 per cent and county schools 20 per cent without special permission.

The Government has itself admitted that the amendment would frustrate the deregulatory intention of the Bill.

A Department for Education and Employment spokesman said that “the amendment introduces a wholly new system for public inquiries before schools may make use of the selective powers which the Bill is intended to give them. The Government believes that this new system is bureaucratic and unnecessary”.

He said that the Government would seek to reverse the vote either at a later stage in the Lords or when the Bill returns to the Commons - probably in the week before Easter. He insisted that there was no sense of panic at the department: “We’ll get there.”

The Opposition accused the Government of “serial carelessness”. Even Baroness Young, a Tory, warned her party that “Lady Bracknell would have something to say.” David Blunkett, the shadow education secretary, praised the Lords for their common sense, while Don Foster, the Liberal Democrat education spokesman, insisted that it was “increasingly likely that the Government will have to lose part of the Bill to get it through in time. The Opposition will delay proceedings as much as possible.”

He advised the Government to drop the part of the Bill that extends selection and resign itself to passing the parts that have cross-party support - the measures on discipline, baseline assessment and home-school contracts.

During the debate, education minister Lord Henley admitted that the Bill left the door wide open for primary schools to become selective: “We believe that just as the present regime does not discriminate between primary and secondary schools, the new baseline threshold should apply to both.”

He added that he thought it unlikely that many primaries would want to select by ability. Lord Tope (Lib Dem) said that this “is probably one of the least recognised aspects of the Bill . . . all our objections to selection at 11 apply dramatically more so at the age of five”.