Plans to develop 17 US-style casinos across the UK are in disarray after the House of Lords voted against proposals last night.

Led by the Archbishop of Canterbury, 123 peers rejected the government’s Gambling Order, which was to ratify plans to develop the UK’s first supercasino in Manchester as well as 16 smaller regional casinos in towns such as Southampton, Leeds and Milton Keynes.

The deadlock between the House of Lords and the government is expected to result in a full-scale rethink of the proposals, which were designed in part to boost private investment and regeneration in some of the most deprived areas in the country.

Tessa Jowell, culture secretary, told MPs the government wanted to ‘reflect’ on the outcome of the votes and would come back to the Commons in due course.

However, it is not clear how much support Jowell and the pro-casino MPs will garner from prime-minister-in-waiting Gordon Brown. In last week’s Budget, Brown slapped a shock £100m tax on casinos and is known to have misgivings about the project.

Property Week columnist Lord Oakeshott, a Liberal Democrat peer, said: ‘This is a massive slap in the face for Tessa Jowell. She has been humiliated by her own side.’

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