The government has been defeated three times in the House of Lords over plans to limit the ability of individuals and organisations to challenge public decisions in the courts.
Tory and Lib Dem rebels joined forces with Labour peers and crossbenchers to pass three amendments upholding legal discretion during judicial reviews.
Former judge Lord Woolf said recourse to the courts was a key "last resort".
But Lord Tebbit said the voters, not judges, should decide on such matters.
Former Conservative ministers Lord Howe and Lord Deben and senior Lib Dems Lord Steel and Baroness Williams were among those to vote against the government, as it lost three parliamentary votes on the Criminal Justice and Courts Bill.
The rebel amendments to the bill maintaining the right of judges to decide whether to grant a legal challenge were passed respectively by majorities of 66, 33 and 33.
MPs must now decide whether to reinstate the measures when the bill returns to the Commons.
The government argues there has been a proliferation in the number of judicial reviews in recent years, with frivolous challenges being used to hold up policies when there is little or no chance of success.
But leading crossbencher Lord Pannick said judges already had the power to dismiss "hopeless and abusive cases" and judicial reviews were vital to hold government to account and to ensure the legality of their decision-making.
"The risk of a public hearing before independent judges encourages high standards of administration," he said.
Lord Woolf, a former lord chief justice, said the legislation was "worrying", suggesting it was "dangerous to go down the line of telling the judges what they have to do".
And former lord chancellor Lord Irvine said the ability to challenge government decisions in court was "indispensable in a democracy".
But for the government, Lord Faulks insisted ministers were not trying to "fetter or undermine" the process of judicial reviews or circumscribe the discretion of judges.
In cases where the government had clearly followed due process, he said its time was "better spent taking forward the reforms the country needs" rather defending decisions in the courts.
"The measures represent a sensible and considered package which will improve the process of judicial review for those with a proper case put well and founded on flaws which would have made a difference to the outcome," he said.
The amendments, he added, would rule out any reform of the current system.