From the BBC:
The government has suffered a House of Lords defeat over a move churches said would prevent them denying jobs to gay people and transsexuals.
Ministers insisted their move was only to clarify the Equality Bill and that the status quo would stay, but churches said it would create confusion.
Peers voted by a majority of 38 to strike out the plans.
The current law allows religious organisations to rule out some applicants on conscientious grounds.
Our friend Simon Sarmiento had an excellent piece on this legislation on the Guardian's Web site last week in which he concluded that the Church was getting all worked up over nothing.
Meanwhile, it is worth remembering that bishops from the Church of England actually get to vote in Parliament on this sort of thing.
We await further instruction from Rowan Williams and Gregory Cameron on what a peculiar system of government we Episcopalians have.