Peers voted in favour of a cross-party amendment that would require draft negotiating objectives to be laid before, and agreed by, both Houses of Parliament, before talks began.
Lord Tyler, a Lib Dem peer, said the amendment would establish “an important constitutional principle” and that the government would be in a “stronger negotiating position” with parliament on its side.
Another Lib Dem peer Lord Purvis, one of the sponsors of the amendment, said that while the government needed trade deals after Brexit “it has shown itself to be bad at negotiating them”.
Lord Stevenson, Labour’s trade spokesperson in the Lords, said the UK parliament was the “only major legislature in the world without a formal scrutinizing role on trade deals — and it’s also the only aspect of public policy that is off limits to MPs.”
Speaking for the government, Lord Grimstone of Boscobel, an International Trade minister, said it was important parliament effectively scrutinised trade deals.
But he said the minsters had already taken a number of important steps, including sharing sensitive information with parliament.
The government was defeated by 308 votes to 261, a majority of 47.
The amendment was to the Trade Bill, which is designed to allow the UK to strike new commercial ties with other countries after Brexit.
Earlier this year international trade secretary Liz Truss hailed what she described as a “historic” UK-Japan trade deal.
But critics warned the amounts of money involved were just a tiny fraction of the trade the UK secured as part of the European Union’s single market.