The coalition government has suffered its first defeat in the House of Lords.
In an obscure procedural move, peers backed a motion that blocked the second reading of the Local Government Bill. Ministers said it would not prevent the bill's ultimate passage into law.
The bill was to block the creation of planned new unitary authorities in Norwich, Exeter, Ipswich and elsewhere.
It will now be delayed by being sent to parliamentary officials, called Examiners, for a report.
Peers backed Lord Howarth's motion by 154 to 150.
The Labour peer told the House that the bill was a "hybrid" - a combination of a public and a private bill - and as such should be referred to the Examiners, for them to look at.
The second reading debate on a hybrid bill cannot take place until the Examiners have reported back.
Lord Strathclyde, leader of the House of Lords, said: "This vote to refer the bill to the Examiners for a ruling on whether the bill is hybrid makes use of an arcane procedure which should have no bearing on the ultimate passage of this bill.
"We do not anticipate any substantive delay, and the government is committed to scrapping this unnecessary and expensive unitary restructuring."