Theresa May’s Conservative government suffered another defeat in the House of Lords on Tuesday, as peers voted for an amendment to the European Union (EU) withdrawal bill. They said that remaining in the European Economic Area (EEA) should be a Brexit negotiating objective.

The EAA, which includes countries such as Norway and Iceland, is a flexible version of the single market offering most of the benefits of a customs union without being subject to institutions such as the European Court of Justice or the common agriculture or fisheries policies.

Earlier in the day, the Lords also voted to remove the Brexit date of March 29, 2019, from the withdrawal bill and agreed on an amendment to allow the UK to replicate any new EU law in domestic law and continue to participate in EU agencies after Brexit.

The 247-to-218 vote in favour of the EAA amendment is being described as an “unexpected triumph” for a cross-party group that included the Liberal-Democrat party’s 100 or so peers, 83 Labourites—nearly half the party’s total—who defied the whip, 17 Conservative “rebels” and most crossbench (unaligned) members.

The defeats came on the final day of debate on the bill in the Lords. It will be sent back to the House of Commons for further discussion, and the government hopes it will appear on the statute book before the end of May.

A Department for Exiting the European Union spokesperson said, “The referendum was a vote to take control of our borders, laws and money. Ongoing participation in the EEA would mean having to implement new EU legislation automatically and in its entirety without having a say on how it is formulated—and it would also mean continued free movement. We will now consider the implications of this decision.”

The defeat, the 13th so far for the government, is a major setback for May, who was forced to agree to a humiliating deal with the EU on the proposed Brexit transition period. She abandoned all her “red lines” and agreed to abide by European Court of Justice rulings, to continue paying into the EU budget and ensure EU citizens full rights, including free movement, for a number of years, whilst also agreeing that the UK will have no representation or say in EU decisions taken during the transition.

Since then, for fear of splitting the Conservative Party, she has ruled out a customs union but prevaricated over two possible post-Brexit trading models proffered by her cabinet Brexit subcommittee. One is a “customs partnership” under which the UK would collect EU import tariffs on behalf of Brussels: the other is a “highly streamlined” maximum facilitation, or “max fac” customs check arrangement favoured by the hard Brexiteers.

Last week, May failed yet again to make a final decision on the preferred customs option after a Brexit subcommittee meeting during which Foreign Secretary Boris Johnson, Home Secretary Sajid Javid, Defence Secretary Gavin Williamson, Environment Secretary Michael Gove, and the International Trade secretary, Liam Fox, spoke “forcefully” against the “customs partnership.”

May, along with Chancellor Philip Hammond, Northern Ireland Secretary Karen Bradley, and Business Secretary Greg Clark, supports the partnership proposal. On Sunday, Clark said that customs checks would be a nightmare for big business. “Frictionless trade” was “something that we’ve made a public commitment to and we need to make sure that we get that right,” he declared.

Clarke’s comments were anathema to the hard Brexiteers who thought they had extinguished the partnership model, referring to it as a “dead parrot.”

On a visit to Washington Tuesday, shortly before the EAA vote, Johnson launched a tirade against the partnership proposal as “a crazy system whereby you end up collecting the tariffs on behalf of the EU at the UK frontier …. If the EU decides to impose punitive tariffs on something the UK wants to bring in cheaply there’s nothing you can do.”

“That’s not taking back control of your trade policy, it’s not taking back control of your laws, it’s not taking back control of your borders and it’s actually not taking back control of your money either, because tariffs would get paid centrally back to Brussels,” he said.

May was not strong enough to publicly rebuke Johnson, but a Number 10 spokesperson repeated that the proposal was still an option. Dominic Grieve, the Conservative former attorney general and a backbencher in favour of continuing customs union membership, leapt in to declare, “I don’t think [Johnson] is in any way inhibited by normal propriety in government.”

“I can see why, in view of the difficulties and the divisions, [May’s silence] may be an exercise in restraint on her part but it doesn’t make it any more desirable that a cabinet minister should express himself in the pages of the Daily Mail in this fashion.”

Grieve suggested that “there are an overwhelming number of members of parliament who think that a continuing relationship with the EU, facilitating frictionless trade, is absolutely essential for our economic interests.”

The EAA vote is also a crisis for Labour Party leader Jeremy Corbyn, whose peers were under orders not to support the amendment, which was tabled by a Labour peer, Lord Alli.

The issue of Brexit has long been a focus of the efforts of Labour’s right wing to oust Corbyn. They will now increase pressure on him to endorse membership of the Single European Market and a second referendum on British withdrawal from the EU.

The Blairites not only centre their hopes to arrest Brexit on encouraging sympathetic Tory MPs to rebel against May when parliament votes on the end deal. Former Prime Minister Tony Blair has pleaded openly with the Tories to recognise that the defeat of Brexit is the best means of preventing a Corbyn-led government. Brexit would cause major damage to “Britain’s geo-political standing” and the West’s ability to challenge the rise of competitors—most notably China and Russia—he has said.

Following the EAA vote, Chuka Umunna, the Labour MP who heads a pro-Remain cross-party grouping that includes senior Tories and business groups, demanded the Corbyn leadership stop dithering and state its position. “The time for constructive ambiguity is over—our members and our voters will be delighted with this clear signal that we will not go along with this Tory Brexit,” he declared.

Labour MP Owen Smith, whom Corbyn was forced to sack from his front bench in March after he called for a second referendum, tweeted, “Despite the Whip, Labour Peers voted in significant numbers tonight and have won the vote to keep the option of Single Market membership on the table—ensuring the Commons will now have a vote to do the same. Democracy in action!”

The People’s Vote campaign, which is calling for a referendum on the final Brexit deal, called both May and Johnson’s proposals unworkable. It issued a statement from Labour MP Rupa Huq saying, “To put jobs first, to protect the Irish peace process and to give our young people a future we should stay in the customs union and single market and put any final Brexit deal to a people’s vote.”