Plans for inquests without juries have proved controversial
The government has been accused of trying to revive plans for "secret" inquests, months after announcing it had dropped the controversial plan.
Campaign group Liberty says a clause in the Coroner's and Justice Bill would allow an inquest to be suspended and a secret inquiry held in its place.
The government suffered two defeats in the Lords on the Bill on Wednesday but wants to press ahead with the plan.
It is intended for inquests involving sensitive information.
The government has argued some inquests should be held without a jury when national security, crime prevention or diplomatic reasons are involved.
But critics are worried that key details in cases like that of Jean Charles de Menezes - the Brazilian man shot dead by police who mistook him for a suicide bomber - would be kept secret.
Plans to remove juries from some inquests and keep key evidence secret have twice been dropped from legislation in the face of cross-party opposition.
But Liberty has accused the government of resurrecting the plan - in a clause in the Coroner's and Justice Bill.
The clause says "a senior coroner must suspend an investigation ... into a person's death if the lord chancellor requests the coroner to do so on the ground that the cause of death is likely to be adequately investigated by an inquiry under the Inquiries Act 2005".
In a debate in the Lords on Wednesday, Lib Dem peer Baroness Miller said that was "an even worse solution".
She said "institutional independence" would be lost because the state would be "heavily involved in setting up the inquiry process".
A spokeswoman for Liberty said: "National security can be protected within the jury system as it has been for centuries but the relatives of those who die on the government's watch - whether in Brixton or Basra - are entitled to know why."
The government suffered two defeats on the bill in the House of Lords on Wednesday night. One of which related to the use of intercept evidence - peers backed a Lib Dem amendment to allow its use in inquests.
Campaigners believe that means the "secret" inquiry would not be needed.
A Lib Dem spokeswoman said: "It is the issue of intercept evidence which the government is using as justification for secret inquests.
"If intercept evidence is permitted to be seen by the coroner then there is not justification for a separate system."
But the government says it will try to overturn the amendment when the legislation comes back to the Commons.
A Ministry of Justice spokesman said it could potentially lead to "wide public disclosure" of sensitive intercept material and the sources and techniques used to obtain it.
"Disclosure of intercept capabilities would clearly have a very real and damaging impact on our ability to gather intelligence that is vital to national security and the fight against serious organised crime."
He added that the Inquiries Act had been law since 2005 adding: "We have tabled some amendments in this Bill to give better effect to the policy, but those amendments do not lead to the lack of transparency and accountability that Liberty sets out."
Moves to allow some inquests to be held in private follow the case of Azelle Rodney, 24, shot dead by police in London in April 2005, which has still not been subject to a full inquest.
The coroner ruled one could not proceed because so many passages were crossed out in police officers' statements - thought to relate to information obtained by phone taps or bugs as he had been under police surveillance.