Theresa May was under pressure to reopen the issue of Britain’s membership of a customs union after suffering two big defeats in the House of Lords on the government’s key Brexit bill.

Peers backed an amendment to the EU withdrawal bill that would force the government to explain what it has done to pursue remaining in a customs union, by 348 votes to 225 – a convincing majority of 123.

May suffers big defeat in Lords as peers back forcing minister to explore Brexit customs union option - Politics live Read more

The government suffered a significant rebellion on the amendment tabled by crossbench peer Lord Kerr, which received the backing of 24 Conservatives, including former ministers Lord Patten, Lord Heseltine and Lord Willetts. A separate amendment that would limit the power of ministers to slash red tape without the approval of parliament was also passed, by 314 votes to 217.

The debate on the government’s key piece of Brexit legislation, in a packed chamber, was watched by the shadow Brexit secretary, Keir Starmer. After the customs union vote, he said: “The passing of this cross-party amendment is an important step forward. Theresa May must now listen to the growing chorus of voices who are urging her to drop her red line on a customs union and rethink her approach.”

Explaining why he believed a customs union was so important, Kerr underlined the difficulty of replacing the UK’s trade with the EU with new deals with other countries. “Looking further afield is well worth doing, but it will be very hard not to see a fall in overall exports if our trade with the EU is made more complicated, and it will be much more complicated if we leave the customs union. We must try to limit the damage of our nearest, because closest, market,” he said.

The amendment would commit the government to report to parliament “outlining the steps” it had taken to secure “an arrangement which enables the UK to continue participating in a customs union with the European Union”.

A spokesperson for the Department for Exiting the European Union (DeExEU) said: “we are disappointed that parliament has voted for this amendment. The fundamental purpose of this bill is to prepare our statute book for exit day, it is not about the terms of our exit. This amendment does not commit the UK to remaining in a customs union with the EU, it requires us to make a statement in parliament explaining the steps we’ve taken.”

But opposition peers hope the substantial support for the amendment could strengthen the hand of pro-customs union Conservative MPs, who have said they plan to force the issue in the Commons.

Peers will continue debating and amending the bill for another five days, spread out over the next few weeks. It will then be returned to the House of Commons, where MPs will decide whether to accept the changes, or refer them back to peers, in a process known as “ping pong”.

The EU withdrawal bill transfers EU law on to the UK statute book in preparation for Brexit – and grants the government sweeping powers to tweak it in the process.

Separately, Labour peers hailed concessions from the government over another amendment, on EU rules on clinical trials. Crossbench peer Lord Patel had tabled an amendment that would ensure EU clinical trial regulations, which have not yet come into force, were enacted in UK law. He withdrew it after reassurances from the government minister in the Lords.

A spokesman for the DeExEU said the government would be willing to continue accepting changes to the complex bill as it makes its way through parliament.

“We have always said we are open to listen to expertise, be it from peers or MPs, and if we think the bill can be improved, we will move to do so. That will be the approach through the whole process.”