The House of Lords previously defeated the European Parliamentary Elections Bill because peers were concerned the closed list system of proportional representation denied voters' real choice.

Under closed lists, people would vote for a party slate rather than individual candidates within the list of potential Euro-MPs put forward.

The Lords are at loggerheads with the government

As such, parties would effectively be able to dictate which of its candidates would win seats - and also the reverse.

The Lords on Wednesday refused to accept an attempt from the Commons to reject its earlier defeat.

Peers voted 221 to 145 to defeat the Bill once again.

The move lands Prime Minister Tony Blair with a major problem. As the legislation began in the Lords, it cannot be forced through by the Commons.

He may be forced to either accept closed lists against his wishes or abandon the entire piece of legislation.

The challenge on European elections is being led by Conservative Lords MacKay of Ardbrecknish and Henley.

Lord MacKay accused the government of "not so much trusting the people as telling people that the party knows best".

He said: "The individual voter will have no way to influence that all important order"

Labour former cabinet minister Lord Shore agreed, saying: "It's no longer the electors choosing their MEP or MP. It's a 'selectorate', a small, anonymous group of party officials - not good enough.

"It doesn't conform to the standards of democracy that we expect from the British parliament."

Although the Commons cannot reject the Lords amendment a second time, MPs are allowed to re-word it in line with the government's intentions.

Jack Straw: Closed lists are fairer

When the issue came before the Commons for the first time, it voted to reject the Lords amendment by 338 votes to 131.

Home Secretary Jack Straw argued closed lists led to less "eccentricities" and fairer results.

Mr Straw said: "Paradoxically, you end up with less voter choice under the open list system than under the closed list system."