By Carole Walker
BBC Political Correspondent
It is back to the drawing board for the government's plans for getting rid of the remaining 92 hereditary peers in the House of Lords.
Lord Falconer: Back to the drawing board
Having found it impossible to get parliament to agree on this final phase of House of Lords reform, the government must now decide what to put in its manifesto for the next election.
The Lord Chancellor, Lord Falconer, has suggested the powers of the upper house as well as its composition could be ripe for reform.
That could open another huge can of worms that would slither over Westminster for another parliament.
For many in the Labour party, the hereditary peers symbolised an outdated way of running the country that had to be swept away by the New Labour broom.
Inherited privilege would have no place in a reformed constitution.
Lord Falconer said the plans were unlikely to succeed and so there was no point spending more time in Parliament on the issue.
So when Labour swept to power in 1997, its election manifesto declared the right of hereditary peers to sit and vote in the upper house would be abolished.
But it has all turned out to be far more difficult than Tony Blair envisaged, and despite his huge majority, he has had to back down again.
Most of the 759 hereditary peers lost their rights back in 1999, but 92 of them were allowed to remain as part of a highly controversial deal.
Labour's leader in the Lords at the time, Tony Blair's old friend Lord Irvine, told parliament they would not be removed unless it was part of a wider reform.
'Seven car pile-up'
The problem is that parliament has found it impossible to agree on the next stage - who should sit in the House of Lords and whether they should be appointed or elected.
When a Joint committee of both Houses came up with seven options, ranging from fully appointed to fully elected - with a range of hybrids in between - the Commons voted against every single option.
" A seven car pile-up" was how one senior Labour MP described it.
The other difficulty is that Tony Blair does not want a largely-elected second chamber, because he fears that would allow it to challenge the supremacy of the Commons.
Yet a large number of his own MPs believe that elections are the only way to give legitimacy to a second chamber.
The Tories have come out in favour of an 80% elected House of Lords and the Liberal Democrats believe it should be largely elected.
The government had fallen back on the idea of simply getting rid of the remaining 92 hereditaries and leaving wider reform for another day.
That provoked fury in the House of Lords where peers were already up in arms over a host of other proposals including the government's plans to scrap the post of Lord Chancellor.
Last week, they succeeded in referring those plans to a select committee.
The government feared that opposition to a Bill to remove the hereditary peers might clog up the parliamentary timetable and delay other important legislation.
Tory peers have been swift to point out that the government would have run into some serious opposition in the Commons too.
It's thought the former Foreign Secretary Robin Cook might have tried to amend the Bill to create a fully-elected Lords.
That would get the support of a substantial number of Labour MPs as well as Tories and Liberal Democrats.
It would all have been deeply embarrassing for the prime minister.
Last weekend at Labour's spring conference, Deputy Prime Minister John Prescott launched a ritual attack on the hereditary peers.
"It's about time we completed our manifesto pledge. And got rid of the lot of them," he said. "Now that's a great campaign issue."
But Mr Prescott is astute enough to know that reforming the House of Lords is hardly a burning issue for most voters.
Yesterday the Cabinet decided this was no time for infighting over constitutional reform to dominate business at Westminster.
As the Lord Chancellor Lord Falconer put it this morning: "We have got to focus on the things that really matter, particularly when there is no more than about two years to go before an election."
So once again Lords reform has been kicked into the long grass.
Labour will have to pick it up in time for the next election, but it could still be booted around for months, even years to come.