The House of Commons last night voted by a wide margin to have a fully elected upper House.
The vote was not on an Act of Parliament and therefore will not immediately become law.
It is thought that many traditional-minded MPs voted for the most radical proposal in order to scupper plans to elect a proportion of peers.
The House of Lords has voted against many of the gay rights legislation brought forward by the current government.
Between 1998 and 2000, the Lords rejected laws to equalise the age of consent so often that the Commons had to over-rule them.
The House of Lords was partially reformed in 1999, when all but 92 of the hereditary peers were removed. A Commons vote in 2003 failed to find a way forward.
Various models were considered by MPs over two days of voting this week. While Tony Blair was said to be in favour of a 50% elected, 50% appointed Lords, the Commons voted for 80% elected by a majority of 38 votes.
MPs then supported the 100% elected Lords by a majority of 113. Leader of the House of Commons Jack Straw, who is responsible for the reforms, said the strongly expressed view of MPs would effect the final decision of the government on the matter.
“This is the first time there’s been a clear view on this for 98 years, so it’s progress,” he told BBC Radio 4.
“I mean business, so does the government and so, I think, do the other parties.”
MPs are keen to reform the upper House. It was a manifesto commitment from Labour in 1997, and the ongoing “loans for peerages” scandal has added some urgency to the reform process.
The government plans to allow the 26 bishops and archbishops of the Church of England to retain their seats in the reformed Lords, along with the 12 law Lords.
Mr Straw is likely to bring forward a bill which will create smaller second chamber, probably of around 500 members, possibly called the Reformed House.
Members would be elected or appointed for 15 year terms or for five-year terms with members only allowed to serve three terms.
The proposals will be debated by the Lords themselves next week – they are expected to oppose a wholly elected second chamber.
Ben Summerskill, chief executive of gay equality organisation Stonewall, commented:
“Regardless of people’s personal political views, we are not certain that an elected House of Lords would be any more gay friendly than the current appointed one, simply because the parties are not particularly good at picking gay candidates. “