Prime Minister Tony Blair's government suffered an unexpected defeat over plans to introduce a law aimed at combating religious hatred, which critics said curbed freedom of speech.
Lawmakers voted on late Tuesday to reject proposals that would make it a criminal offense to incite religious hatred through threatening words or actions, defeating the government in two separate votes, first by 288 to 278 and in a second vote by 283 votes to 282.
Blair did not take part in the second vote, which his government lost by one vote. He had voted during the earlier vote on the issue on Tuesday night.
As the results were announced in the Commons, members of the opposition Conservative party shouted "resign."
Hundreds of people demonstrated against the proposals outside the Houses of Parliament. Opponents argue the proposed laws would curtail freedom of speech, while supporters say religious groups should have the same protection as racial groups, who are already covered by a similar law.
Blair, who last November suffered his first defeat in a House of Commons vote since taking office in 1997, was twice defeated, as lawmakers backed a series of restrictions to the proposals.
The proposed legislation sparked a fierce debate in Britain as opponents claimed it did not clearly define what constitutes incitement of religious hatred. Critics, including comedian Rowan Atkinson, best known for his character Mr Bean, said they feared artistic expression and criticism of religious groups could be considered criminal.
Britain's upper chamber had amended the bill to restrict the new offense to using threatening words and behavior, rather than a wider definition that included insults and abuse.
The House of Lords also inserted provisions specifying that it would not be an offense to seek converts, or to discuss, criticize, insult, abuse or ridicule religion, belief or religious practices.
Home Secretary Charles Clarke, responsible for law and order, said the government accepted the changes.
Atkinson had earlier criticized the ambiguity of the proposed law and said the legislation appeared to be a "circular bit of drafting nonsense."
"There is a so-called free speech clause which the government is trumpeting like mad as a big new idea, but to me, having read it, it is virtually meaningless," he told BBC.
Rabbi Jonathan Romain, an opponent of the legislation and spokesman for the Movement for Reform Judaism, said that while religions deserve protection, they are not untouchable.
"No one secure in their religious beliefs need fear laughter, while the Bible itself contains not only the occasional giggle, but divine humor too," he said. "What is required is legislation banning inflammatory words that lead to violence, but leaves the hearty laugh or skeptical guffaw unmuffled."
Other opponents of the law suggested that hate against religious groups could be handled under current legislation already protecting racial groups, including Sikhs and Jews.
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