The Government has been defeated over its Brexit bill in the Lords, with peers demanding protection for EU citizens in the UK.
A total of 358 voted for a Labour amendment to the bill to trigger Article 50, with 256 voting against.
It called for unilateral guarantees for approximately 3.5 million people from the bloc living in Britain.
In an attempt to head off the defeat, Amber Rudd had written a letter assuring peers that EU citizens would be treated with the utmost respect.
Labour, Lib Dem and some crossbench peers had said they felt a unilateral statement of support was necessary to remove the insecurity many felt ahead of Brexit.
Many who spoke in the debate preceding the vote said they had received many letters from people worried about the effects on their families.
Earlier, the Government's spokesman on Brexit in the Lords, Lord Bridges of Headley, had made an impassioned plea for the amendment to be defeated.
He said: "The status of EU nationals is one of the most emotive issues created by this debate. The lives of over four million people who have chosen to make this country their homes.
"I'd like to make two core points. First... between now and the date of exit, nothing will change for EU nationals living in the UK.
"Any EU citizen who is exercising EU treaty rights or has the right to remain, continues to have those rights to remain. There is no need to apply for a document to prove this.
"An EU national who has been here for five years, does not have to apply for a document to prove their right to be here permanently.
"The bill to repeal the European Communities Act (the Great Repeal Bill) will not be used to change our immigration system. This will be done through a separate immigration bill.
"After we have left the EU, the UK will continue to be bound by and observe the ECHR (European Court of Human Rights), which, in accordance with Article Eight, and appropriate case law, will protect EU nationals' rights to ... their private and family life.
"So... nothing will change for any EU citizen... without this parliament's approval."
He went on to remind the house that the issue of the long-term rights of EU citizens in the UK and UK citizens throughout the bloc will be dealt with early in the forthcoming Article 50 negotiations.
The bill will now have to return to the Commons where ministers will have to use their majority to overturn the amendment.
If they succeed it would then 'ping pong' back to the Lords, although it is unlikely peers would force a second vote.
However, the process could delay the bill.
Theresa May is understood to be planning to trigger Article 50 around 15 March and has long had a deadline of the end of March.
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