The government suffered two further defeats over its planned legal aid reforms last night after peers voted in favour of amendments to retain funding for children and young people.

At the third reading stage of the Legal Aid, Sentencing and Punishment of Offenders bill, the House of Lords voted by 232 votes for and 220 against to ensure that children are automatically entitled to legal aid.

In a second amendment the house voted 228-215 to retain legal aid for all clinical negligence cases involving children.

Gold medal winning Paralympian Lady Grey-Thompson told peers that there should be no question of children being left to present cases on their own, or being reliant on the exceptional funding test. She said that the government’s proposal to remove funding for children would remove children’s rights to challenge the state.

Meanwhile, the government defeated an amendment that would have retained legal aid for vulnerable people aged 18-25, and another that would kept legal aid to enable overseas victims to sue UK companies rather than having to use conditional fee agreements.

The government has now been defeated 11 times by peers over the bill designed to save £350m from the legal aid budget, the second largest number of defeats in a bill ever. Labour’s Criminal Justice Act 2003 was defeated 17 times by peers.

On part 2 of the bill, which abolishes the recoverability of success fees and after-the-event insurance from defendants, Lord Prescott failed to win concessions on defamation and privacy.

The former deputy prime minister, who campaigned on the issue after his experiences with phone hacking, argued that claimants should have access to ‘no win, no fee’ in cases where they are not on an equal footing with defendants. Prescott told the house: ‘The government are shifting the balance of payments and costs on to the complainant, even when the complainant is found innocent and the defendant is found guilty. I do not think that that is right.’

Justice minister Lord McNally said the issue will be looked at in a future defamation bill and told Prescott his amendments were ‘premature’. The House voted with the government by 194 to 120.

The bill will now go back to the House of Commons where many of the Lords amendments are expected to be reversed.