The government has suffered more significant defeats to its Brexit legislation in the House of Lords as the row over membership of the customs union threatened to split the cabinet.

Peers voted by a majority of 77 to keep the fundamental charter of EU rights in force after Britain leaves the EU with 10 Conservative voting with the opposition.

It raised the prospect of the government being defeated in the Commons on the amendment when the EU withdrawal bill returns for final consideration by MPs in May. Ministers only averted a defeat on the issue in January by offering to review the protections given by the charter.

The former Tory attorney general Dominic Grieve has indicated that he might vote against the government when the bill returns, saying he was waiting to hear if there would be any concessions.

Paul Blomfield, Labour’s Brexit spokesman, welcomed the vote. “The future of human rights protections is not a party political issue. It is about the type of country we want to be and the values that we want to champion,” he said.

Opening the debate, the cross-bencher Lord Pannick, who is a practising lawyer, argued that it was “unprincipled and unjustified” to remove the protection of rights from children, older people and disabled people that are covered by the charter.

The government lost a series of other votes that could have given ministers the power to restrict when citizens could use principles of EU law to challenge the government.

However, it avoided defeat on another measure relating to public health protection by pledging to allow EU obligations to continue after the UK left the EU.

Peers have been reluctant to challenge the Commons on Brexit itself, but many of them regard protecting the detail of legal and constitutional principle as one of their core functions.

On Wednesday, the government is expected to table amendments relating to devolved powers, which could provoke a significant revolt in early May when it is due to come to a vote.

The defeats came as Downing Street played down reports that senior cabinet ministers continue to be split over the customs union, with key Brexiters wanting to drop one of the two options put forward by the government.

Theresa May could face calls from ministers including David Davis, Liam Fox and Boris Johnson to abandon the so-called customs partnership, which is generally regarded as her preferred option.

At a meeting of the cabinet’s Brexit subcommittee on Wednesday, they were expected to argue that the proposal, which relies on Britain to collect EU import tariffs on behalf of Brussels, could lead to the UK staying in a customs union.

However, her official spokesman said the government was still looking at both options – also including a proposal to use technology to achieve a frictionless border – and refused to confirm whether the prime minister had a preference. Brussels has repeatedly made clear it does not regard either option as workable.

Some Brexiters fear that May is paving the way for a compromise on the issue after her team privately admitted she may have to accept permanent membership of a European customs union. “We are absolutely clear that we are leaving,” the spokesman insisted.

A group of senior Conservative ministers and backbenchers, thought to include Grieve, are said to be drawing up a customs union “in all but name” in an effort to resolve the issue in the hope both sides would accept a compromise.

Timing is at stake, with some remainers hoping that extending membership of the customs union beyond the end of the transition period would make it more likely that the UK would stay in. The government believes it can get new customs arrangements in place by December 2020, although experts are sceptical.

Downing Street was earlier forced to deny reports that it was threatening to turn a Commons vote on the customs union later this spring into a form of “confidence vote” that would end May’s leadership or even topple the government if she lost.

It has signalled, however, that it will abstain in the debate this week on the issue, saying it was regarded simply as “routine backbench business”.

The EU’s chief negotiator Michel Barnier said on Monday that Britain must give Brussels a clear Brexit blueprint to allow negotiations to move forward.
All those involved “know where the EU stands” but “more clarity” is still needed from the UK, Barnier said.

In a speech in Hannover he said it was up to the government to come up with its vision for the future that either finalised or changed the UK’s red lines. “It is now up to the UK to come up with its vision for the future, which should confirm the UK’s red lines or adapt them,” he said. “Once we have more clarity from the UK, we will prepare a political declaration on the framework for the future relationship to accompany the withdrawal agreement in the autumn.”