Peers have cleared the way for the removal of the law which prohibited local authorities from promoting homosexuality.
Lady Blatch is worried about sex education material
A Tory attempt to grant parents legal rights over the content of their children's sex education was defeated in the House of Lords on Thursday.
Baroness Blatch's move, to protect children from what she sees as "explicit and unacceptable" material, was rejected on a free vote by 180 to 130.
The vote clears the way for the removal of the Clause 28.
It came during report stage debate of the Local Government Bill, which repeals the clause.
The move was welcomed by gay rights groups, with Ben Summerskill, chief executive of Stonewall saying it was "a triumph for 21st century tolerance over 19th century prejudice".
He said Clause 28 had been "deliberately framed in order to stigmatise a minority group".
"We're delighted that the House of Lords has demonstrated a willingness to
listen to reason at last," he said.
"Stonewall has worked long and hard to have this deeply offensive law overturned," he said.
Former Prime Minister Baroness Thatcher, dressed in black, used the Lords debate to make her first public appearance since the death of her husband Sir Denis.
Lady Blatch said her proposal would give parents the go-ahead to vet material used in sex education by way of ballots.
She warned schoolchildren as young as 11 were being given details of sexual activities, including anal sex, sado-masochism, dressing up, tying up, use of pain, multiple partners and partner swapping.
But she claimed the measures she was proposing were not focused on homosexuals and were not an attempt to replace Section 28.
"Mine is a simple mission to protect children from the worst form of sex education," she said.
"My amendments achieve that by giving power to parents to make judgements about the sex education of their children and what they receive in school."
She stressed: "Very few parents would allow their seven-year-old to participate in a class discussion on anal intercourse, yet there are local authorities that recommend sex education packs outlining just that."
Cross-bencher Lord Palmer backed Lady Blatch's case, arguing that there was a genuine need "for strong statutory safeguards" over sex education in schools, adding that "vague guidance was not enough".
But Labour's Lord Alli said Lady Blatch's attempt was a wrecking amendment which sought to replace Section 28 with an "unworkable system for teachers and parents".
And Lord Rooker, a minister from the Office of the Deputy Prime Minister, said: "This is about keeping Section 28 on the statute book.
"That's the consequence of the amendments. The government has no intention of organising polls in 30,000 schools."
After the vote, Lady Blatch expressed anger at the "aggressive
reluctance" of some peers to give parents more power.
She added: "Out of 24 bishops, not one contributed to the debate.
Only one supported my amendment and one voted against on an issue of child
She said her aim "was to protect children from the worst form of sex education and to
place the power in the hands of parents to know what is going on in schools.
"There was wilful misinterpretation of my intentions."
Section 28 was introduced when Margaret Thatcher was prime minister and formed part of the 1988 Local Government Act.