MPs will vote on whether to stay in the European Economic Area (EEA) after the House of Lords backed amendments to the Brexit bill.
It could return to Commons by next week, where it’ll be subject to a vote.
Labour lords were instructed to abstain from the vote, but 83 went against that and voted in favour of the amendments, as did 17 Conservatives.
It’s another defeat for Theresa May, whose proposals included a customs partnership with the EU, but not remaining in the single market.
If her proposals went ahead, the UK would collect import tariffs on behalf of the EU.
It’s also a rebellion against Jeremy Corbyn, as peers defied the instruction to abstain.
This brings the number of defeats by the Lords to 14.
May suffered another blow from within her own cabinet this week, after Boris Johnson criticised her strategy.
In an interview with the Daily Mail, he said: “If you have the new customs partnership, you have a crazy system whereby you end up collecting the tariffs on behalf of the EU at the UK frontier.
“If the EU decides to impose punitive tariffs on something the UK wants to bring in cheaply there’s nothing you can do.”
He said that keeping ties with Brussels could hinder the UK’s freedom in negotiating trade with other countries.
“That’s not taking back control of your trade policy, it’s not taking back control of your laws, it’s not taking back control of your borders and it’s actually not taking back control of your money either, because tariffs would get paid centrally back to Brussels.
“That’s not what the Americans want to see. What they want to see, like all our friends, is a confident free-trading Britain able to do its own deals.”
The rest of the cabinet is split over the proposals.
It is possible to be in the EEA while not being an EU member - Iceland, Leichtenstein and Norway being examples.
Immigration could be a stumbling block, though - free movement of people is a key proponent of EEA membership, while a customs partnership alone wouldn’t necessarily come with that clause.