Labour have accused the government of weakening local councils by attempting to speed up the planning process in a bid to boost growth.
Opposition spokesman Lord Adonis made the comments during a second reading debate on the Growth and Infrastructure Bill, on 8 January 2013.
Under the government's proposals, some infrastructure projects will be referred to the secretary of state, rather than local planning authorities, to be determined within a 12 month timetable.
Lord Adonis said ministers were contradicting not only their own policy of localism but also proposals put forward by Tory former deputy prime minister Lord Heseltine.
He told peers the bill did precisely what Lord Heseltine had criticised in his report last October on developing a national growth strategy.
"On the unsubstantiated claim that local authorities aren't giving enough planning consents quickly enough it wrests power back to the centre - authorising ministers to suspend local planning authorities entirely for the first time since the modern planning system was established after the Second World War."
But Communities and Local Government Minister Baroness Hanham insisted the bill was "primarily a deregulatory measure in support of the government's decisive actions to put the country's economy back on a stable footing and restore growth".
Lady Hanham said most councils were dealing with planning applications efficiently with the approval rate at a 10-year high.
But a small number were making "unnecessarily slow decisions" and others saw a relatively high proportion of their decisions to refuse permission, overturned at appeal.
Liberal Democrat Lord Tope was critical of the change, saying it seemed to assume that the "major inhibitor to growth is the planning system and local planning authorities generally".
He said: "There is absolutely no evidence to support that contention. If we are to legislate for such a draconian measure, we do need to have from government the evidence that suggests this is necessary. I don't believe that evidence is there."
Tory Baroness Eaton, a vice president of the Local Government Association, hit out at the legislation as a "step in the wrong direction".
She told peers: "It will not deliver its main objective of widespread economic growth but rather move us dangerously on a narrow winding path away from the golden road of localism down which to date we have made much progress."
To view the second part of this debate click