The government has been defeated in the Lords in a vote on its plans for a £26,000-a-year household benefit cap.
Peers backed a bishop's amendment by 252 to 237 that child benefit should not be included in the cap.
Critics argued that imposing the same cap on all families, regardless of size, would penalise children.
Ministers say including child benefit would make the cap pointless by effectively raising it to £50,000 and they will seek to overturn the defeat.
Earlier the government defeated another amendment proposed by Labour to exempt people considered at risk of homelessness from the cap.
The annual cap would come into force for working age families in England, Scotland and Wales from 2013.
cont.
http://www.bbc.co.uk/news/uk-politics-16675314