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A "rapid review" into the structure of the House of Lords has been ordered by the government following a vote in the House which defeated planned tax credit cuts.
The historic stance from the non-elected chamber has provoked a power-struggle in the Palace of Westminster that could cause changes to the UK constitution.
ITV News Political Correspondent Emily Morgan explains:
George Osborne remains adamant that his proposals for tax credit reform will go ahead, despite his initial plans being defeated by a vote in the House of Lords yesterday.
ITV News Deputy Political Editor Chris Ship has more:
A power struggle between the House of Commons and the House of Lords is underway after a motion to delay £4.4 billion of tax credit cuts while an impact assessment is carried out was voted in on Monday.
Following the vote Downing Street has confirmed a rapid review of the House of Lords will take place and Chancellor George Osborne has insisted he will press ahead with changes to reduce the welfare bill despite opposition.
Downing Street has confirmed a rapid review of the House of Lords will take place in the wake of the Government's tax credits defeat.
A statement from Downing Street said:
Commons Speaker John Bercow has insisted that the House of Lords were acting within their rights when they voted for a motion to delay £4.4 billion of tax credit cuts while an impact assessment is carried out.
Speaking during Treasury questions he said:
The Speaker's comments came following accusations by leader of House of Commons Chris Grayling that it "cannot be right" for the unelected Lords to stand in the way of the changes.
Chancellor George Osborne has defended his plans to push on with plans to reform tax credits despite opposition, saying the "worst thing you could do for families is have unlimited welfare".
Osborne whose welfare reform plans were defeated in the House of Lords on Monday night said the bedrock of economic security was a "country that lives within its means".
He said: "The worst thing you could do for families is have unlimited welfare because we know where that leads, that leads to job losses and no economic security for families at all."
George Osborne has vowed to push on with plans to reform tax credits despite Monday night's defeat in the House of Lords.
The Chancellor told the House of Commons he would unveil his new plan in next month's Autumn Statement.
He also criticised the Lords for voting down the plans, saying it raised "constitutional issues".
"We will continue to reform tax credits and save the money needed so that Britain lives within its means, while at the same time lessening the impact on families during the transition," Mr Osborne told MPs.
There were further calls for the plans to be scrapped during Treasury questions, with Labour MP Wes Streeting saying the Chancellor was "manufacturing a phoney constitutional crisis" rather than going "back to the drawing board".
Shadow Chancellor John McDonnell said Labour would not attack the Government if the plans were reversed "fairly", calling for Mr Osborne to "listen to reason".
The House of Lords vote to block tax credit cuts creates a "big constitutional issue", leader of House of Commons Chris Grayling has said.
The former Conservative Justice Secretary said it "cannot be right" for the unelected Lords to stand in the way of the changes.
Mr Grayling told Good Morning Britain: "Of course it's a difficult decision to have to take but we have a big task still ahead of us to balance the nation's books and create a sound financial foundation for the next generation.
"What shouldn't happen is unelected peers breaking the traditions of decades and throwing out a financial measure in the wake of three votes in the House of Commons which said we need to go ahead with this."
Mr Grayling said the tax credit cuts were part of a package of changes, including free childcare and cuts to social rents, designed to help working families.
Chancellor George Osborne has vowed to take on the House of Lords after peers dealt a devastating blow to plans to cut tax credits.
The vote - the first time in 100 years the Lords has defied the elected Commons on a financial matter - saw a motion to delay the £4.4 billion of cuts while an impact assessment is carried out win by 307 votes to 277.
A second motion to delay the cuts by at least three years was also passed, by 289 votes to 272.
Mr Osborne said both he and Prime Minister David Cameron were "clear" that the rebellion would "need to be dealt with".
"It has happened, and now we must address the consequences of that. I said I would listen and that's precisely what I intend to do," he added.
"I believe we can achieve the same goal of reforming tax credits, saving the money we need to save to secure our economy, while at the same time helping in the transition."
A Number 10 spokesman said now that the century-old agreement between the Commons and the Lords had been broken, Mr Cameron had ordered a "rapid review" to try to "see how it can be put back in place".
Latest ITV News reports
They are not there to interfere with the settled will of the House of Commons, warned Boris Johnson.
A working mum who would be hit by Tax Credit cuts spoke to ITV News ahead of the House of Lords vote on the changes.