The House of Lords may have to "force a showdown" with the Commons over the government's anti-terror proposals, a Liberal Democrat peer says.
The Terror Bill was put together after the July bombings
Lord Goodhart said creating an offence of "glorifying" terror would be "confusing" and unworkable.
Peers have voted to drop the plan but MPs are expected to reinstate it when the Terror Bill returns to the Commons.
Ministers say they will push ahead with creating the new offence, as it was part of Labour's election manifesto.
On Tuesday, peers voted by 270 to 144 against the proposal.
They also insisted on new safeguards on laws designed to stop the spread of terrorist publications, arguing they could put free speech at risk.
Lord Goodhart told BBC Radio 4's Today programme on Wednesday that the offence of glorification "goes beyond anything that is justified for the protection of national security".
It was "the worst of both worlds", as juries would find it difficult to convict and it would be "very restrictive of the media", he added.
Lord Goodhart said the drafting of the Terror Bill was "confusing" and "turgid", so much so that it "could apply" to the American War of Independence.
He added: "No doubt MPs will [reinstate that part of the bill] and when it comes back we will have to consider whether this is an important enough matter to force a showdown on."
But Labour peer Lord Harris of Haringey said the purpose of the Lords was to "scrutinise" legislation passed by the Commons and that voting down manifesto commitments was "not appropriate".
Tuesday's defeats were the second time the government had been thwarted by opposition peers in two days.
On Monday, peers insisted the identity cards scheme should not go ahead until there were full estimates given of its costs, but the Home Office says it will press ahead with the project.
In November, Tony Blair suffered his first Commons defeat as prime minister when MPs voted against plans to allow police to hold terror suspects for 90 days without charge.
Instead, it was decided 28 days - rather than the current 14 - should be the limit.
The Terrorism Bill was introduced following the London bombings of 7 July last year, in which four suicide bombers killed 52 people.
The government originally planned a separate offence outlawing glorification of terrorism but later decided to include it as part of a more general offence covering "indirect encouragement" of terrorism.
But in the report stage debate on the bill, Lord Lloyd said the glorification plan was still unworkable and incomprehensible.
Home Office Minister Hazel Blears immediately vowed to try to overturn the defeat when the plans return to the Commons.
"The government has made a commitment to the electorate to make the glorification of terrorist attacks an offence, and we intend to honour it," she said.
Ms Blears said it was unacceptable for people to be allowed to glorify terrorism and so make others more likely to make attacks.
The Lords report stage of the bill will resume next week. The government wants to complete the scrutiny on 1 February.