Government plans to extend secret hearings into civil courts are flawed and unfair, an influential House of Lords committee has warned.

In a strongly worded critique of the justice and security bill before its second reading in parliament next Tuesday, the constitution committee claims the proposals will undermine the UK's long-established principle of open justice.

Ken Clarke, the justice secretary, has defended the bill as a necessary method of exploiting intelligence material in court cases while protecting it from general disclosure. Civil rights groups, including Liberty, Amnesty and Reprieve, fear it throws a "cloak of secrecy" over wrongdoing such as rendition, torture and illegal detention.

The unexpected intervention of the constitution committee, chaired by Lady Jay, is intended to bolster opposition to the bill. It has been introduced into the Lords first rather than the House of Commons.

Earlier this week the majority of special advocates, security-cleared barristers who appear in sensitive cases, condemned so-called closed material procedures (CMPs) where a defendant or clamant is not permitted to see all the evidence.

They declared: "CMPs are inherently unfair and contrary to the common law tradition … The government would have to show the most compelling reasons to justify their introduction. No such reasons have been advanced and … in our view, none exists."

The report by the Lords constitution committee echoes their misgivings. "This is a constitutionally significant reform, challenging two principles of the rule of law: open justice and natural justice," the peers say.

The proposals contain "three basic flaws". One of them is that it is "constitutionally inappropriate for the executive" to have the dual role of being a party to the litigation and at the same time giving the government significant control over how proceedings are conducted.

Allowing the secretary of state to decide whether national security information should be excluded by a public interest immunity certificate or semi-disclosed under a CMP is inherently unfair, the committee's members state. It should be up to a court to decide which of the alternatives should be pursued.

"There are no grounds for believing that the courts are unable to strike an appropriate balance between the competing public interests of national security and the proper administration of justice," the peers add.

"The court should be required, for example, to consider whether the material could be disclosed to parties' legal representatives in confidence and whether the material could be disclosed in redacted form."

The constitution committee report welcomes the fact that a judge, rather than the secretary of state, would be able to make the final decision on whether or not there should be a closed hearing.

The justice and security bill's second reading on Tuesday is expected to run into severe opposition from senior lawyers in the Lords. Defending it last month, Clarke said: "Only civil cases involving national security evidence will be affected.

"This means that civil claims of mistreatment or complicity in torture brought against British agents which cannot currently be heard in our courts can in future be heard.

"It will stop the taxpayer being forced to pay out compensation even where a case has no merit, and will ensure that the public receives an independent judgment either way on serious allegations which have been laid against the government."

Security co-operation with Britain's allies, such as the US, would be threatened if shared intelligence material was exposed through court cases, the government has argued.