The Government has suffered a damaging defeat in the Lords over its plan to start negotiations on leaving the EU at the end of this month.
Ignoring stern warnings not to amend the Brexit Bill, peers backed a Labour-led move to guarantee the rights of EU nationals living in the UK by a majority of 102.
Voting was 358 to 256 after a passionate and sometime ill-tempered three-hour committee stage debate on the European Union (Notification of Withdrawal) Bill.
The defeat means the Bill, which was passed unamended by the Commons, will now have to return there for further consideration by MPs.
It could put at risk Theresa May's timetable for triggering Article 50 to begin Brexit talks by the end of March.
Shadow Brexit minister Baroness Hayter of Kentish Town warned against EU nationals being used as "bargaining chips" in negotiations to quit the EU.
Lady Hayter said the concerns of EU nationals here and British expats living in Europe shouldn't be "traded against each other".
Urging ministers to remove the uncertainty, she said: "These people need to know now - not in two years' time or even 12 months' time. They simply can't put their lives on hold."
Home Secretary Amber Rudd wrote to every peer yesterday urging them not to back the Opposition amendment to the legislation and was present for part of the debate - sitting on the steps in front of the throne like the Prime Minister did at the Bill's second reading.
But it failed to persuade peers that the Bill should pass unamended and become law as quickly as possible.