Theresa May faces a fresh headache over her Brexit strategy after peers inflicted a defeat on the government in favour of keeping the UK in a customs union with the EU.

The House of Lords supported a cross-party bid to keep Britain in a tariff-free trade bloc with Brussels, which means the legislation will bounce back to the Commons for approval.

Supporters of the Labour-led amendment to the Trade Bill argued MPs should have the opportunity to "think again" on the issue.

But Tory frontbencher Lord Bates pointed out the elected Commons had already rejected such a proposal, adding: "It doesn't need a chance to think again."

It comes as Brexit progress appeared to have ground to a halt after what both Downing Street and the European Commission admitted were "difficult" talks in Brussels on Tuesday.

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The commission said there was still "no solution" to the Irish backstop impasse, despite a meeting between the EU's chief negotiator Michel Barnier and attorney general Geoffrey Cox and Brexit secretary Stephen Barclay.

The lack of progress ramps up pressure on the prime minister ahead of the critical Commons vote on her Brexit deal next week.

Ms May has consistently ruled out remaining in the customs union as it would prevent the UK from striking its own trade deals.

Speaking after the vote, opposition spokesman Lord Stevenson of Balmacara said: "The success of this cross-party Lords motion gives both the government and the House of Commons a chance to step back from the disaster of a no-deal, and to deliver an outcome which would satisfy the clear majority of people in the UK.

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"Ministers must now drop their red lines on Brexit and embark on a fresh approach to the negotiations with the EU - based around a new customs union that protects jobs, secures opportunities for our industries, and removes the need for a hard border in Ireland."

Peers had already inflicted an earlier defeat on the government in seeking a powerful role for Westminster in future UK trade deals.

A DIT spokesperson said: “The outcome of the vote in the Lords is disappointing but we remain focused on delivering on the result of the referendum. This means leaving the customs union and pursuing an independent trade policy.