Secretary of State for housing and communities, Michael Gove MP, said current legacy EU laws on nutrient neutrality are blocking the delivery of new homes, including cases where planning permission has already been granted.

Through an amendment to the Levelling Up and Regeneration Bill, the government planned to “do away with this red tape” in a move it said would lead to 100,000 new homes being built.

The House of Lords last night voted 203 to 156 against the amendment, meaning ministers will now need to bring the proposal forward in a new bill.

Natural England rules currently mean 62 local authorities cannot allow new developments unless builders can prove their projects are “nutrient neutral” in protected areas.

The government said by removing the restrictions, housing developers will deliver an extra £18bn in economic activity.

Ministers argued that watering down the requirement would have a negligible impact on pollution, and had announced new environmental measures, including doubling investment to £280m for the Nutrient Mitigation Scheme run by Natural England.

But environmental groups and opposition parties opposed the plans.