Peers argued the plans for policing MPs expenses were being rushed through
An attempt to delay plans to "clean up" Parliament in the wake of the MPs' expenses scandal has failed.
Peers rejected calls to postpone a bill which will set up a new independent body to oversee claims, despite arguments it was being rushed.
But a proposed new offence of paid advocacy by MPs has been shelved, ministers have said.
And in a further U-turn, the government has agreed that the measure will only affect the Commons, and not the Lords.
Lord Norton of Louth, who had introduced an amendment calling for the bill to be delayed, said the legislation had been "hastily drafted".
Under the Parliamentary Standards Bill, an independent Parliamentary Standards Authority would be established as well as a new Commissioner for Parliamentary Investigation.
The government has already dropped proposals for a legally-binding code of conduct for MPs after fears that it would prompt a flood of legal challenges.
Ministers had planned to change the law so that breaching advocacy rules would become a crime punishable by a fine of up to £5,000.
But Lords leader Baroness Royall said the measure has been dropped following cross-party consultation.
She said it needed "further consideration" and ministers would return to it.
Lady Royall also said that the bill "categorically" would not apply to peers as well as MPs, following earlier suggestions to the contrary from Justice Secretary Jack Straw.
She added that the primary purpose of the bill was to deliver "an independent, transparent and accountable system for handling MPs expenses".
Several peers had highlighted comments made by Mr Straw, who said he expected its arrangements to apply "in due course" to the House of Lords and that eventually the Parliamentary Standards Authority would cover both the Commons and the Lords.
Lady Royall said she had "fully reported the very strong, very proper and very cogent views of this House to the government, and the government have listened to me".
As a result, she added, "this bill does not and will not apply to the House of Lords - I categorically state that fact".
Ministers want to rush the bill through Parliament so that it can become law before the start of the summer recess.
But peers rejected a proposal from a Conservative Lord Norton, who is the professor of government at Hull University, that would stop the bill being fast-tracked onto the statute book.
Lady Royall said: "It is critical for MPs currently in the Commons that the new system should be up and running as soon as possible, but it is also crucial that it is established and properly embedded before the forthcoming general election, so that any new MPs elected at that time are not sullied by the problems of this Parliament."
Former Conservative Leader of the Commons Lord MacGregor of Pulham Market said it was wrong to force the bill into law so quickly.
He added: "There are some serious and fundamental flaws in it and it raises serious constitutional issues as a result of the thoughtless haste with which the government did the drafting."
Labour backbencher Lord Peston argued that putting the deadline for passing the bill back to October would result in a "much better piece of legislation".
For the Lib Dems, Lord Shutt of Greetland, argued that there should be a "sunset clause" to limit the bill's provisions.
He added: "This has been done in a rush."