Peers have rejected Labour's plan for a judge-led inquiry into the bank rate-rigging scandal by 251 votes to 197, Government majority 54.
The Government and Labour clash over the scale of inquiry into the banking scandal. Labour want a full, independent one.
The new government inquiry will look both into the culture of banking and into the setting of Libor rates
The Chancellor's team says his announcement to the Commons will "shoot Labour's fox."