Government plans to force all housing associations to sell off their housing in an extension to Right to Buy have hit a setback in the Lords.

Peers have voted in favour of an amendment to the Charities Bill which seems to exempt housing associations with charitable status.

The amendment, put forward by Labour’s Baroness Hayter of Kentish Town, was passed by a majority of 258 to 174.

The new clause says that the “Charities Commission shall ensure that independent charities are not compelled to use or dispose of their assets in a way which is inconsistent with their charitable purposes”.

Baroness Hayter told the Lords: “Many other interventions help people get into the housing market, but we do not want the Right to Buy to be at the expense of the charitable aims of those charities which, for example, have been donated land, money or property for a specific purpose, whether it is to help house the elderly or rural workers or to rent to low-income families or other particular categories of beneficiary.”

A large number of housing associations are registered charities. In 2011, the magazine Inside Housing reported that there were 1,236 housing associations with charitable status across England and Wales.

The Charities Bill will next be considered by the Commons after the parliamentary recess, which lasts until September 7.