Baroness Williams earlier led a Lib Dem protest outside Parliament calling for the end of restrictions on protests.
Lib Dems want the ban on spontanous protest lifted
A controversial 2005 law created an "exclusion zone" around Parliament, within which police must be given notice before a protest is held.
Lib Dem peer Baroness Miller has brought forward a Bill to abolish the sections which impose the restrictions.
During the demo outside the House of Lords the peers read out names of people arrested under the Act.
The protest came as peers prepared to debate repealing parts of the Serious and Organised Crime and Police Act.
A Liberal Democrat spokesman confirmed they had registered with police to hold the demonstration.
"It comes to something when Parliamentarians can't even protest outside their own House without say so from the police," he said.
The requirement for police permission, introduced in the Serious Organised Crime and Police Act 2005, was the Government's and Parliament's response to a round-the-clock vigil in Parliament Square by anti-war protester Brian Haw.
Mr Haw's placards and his supporters' use of loudspeakers had annoyed MPs and peers.
But the law has since been used to arrest individuals for unauthorised peaceful demonstrations, such as Maya Evans reading out the names of Iraq war dead in Whitehall, or people wearing politically offensive tee-shirts.
Baroness Milller, introducing her Public Demonstrations (Repeals) Bill, said the 2005 Act had had a "chilling" effect on demonstrations, with many people believing they were totally banned.
She said: "Freedom to demonstrate outside Parliament is one of the most important freedoms of expression that Britain has.
"This government changed that fundamental freedom to a conditional one."
Lady Miller said other laws already guarded against violent or disruptive protests.
"Now people are afraid they will get a criminal record for simply holding a placard or even wearing a tee-shirt in the environs of Parliament," she said.
The requirement for 24 hours' notice meant "spontaneous" protest was illegal, said Lady Miller.
She dismissed the counter-arguments of security, aesthetics and access to Parliament.
But her call for a change in the law was rebuffed by the government.