Jeremy Corbyn must seize chance to keep UK in EU single market after Lords defeat hands decision to MPs, Labour leader told

Leader told Theresa May could also be defeated in the Commons - if he sides with a growing number of Tory rebels

Jeremy Corbyn has been urged to seize the chance to keep the UK in the EU single market, after a dramatic House of Lords vote handed the decision to MPs.

Theresa May is vulnerable to an identical defeat in the Commons if Labour sides with a growing number of Tory rebels in a critical vote that would derail her Brexit strategy, pro-EU MPs said.

The clash looms after peers shocked both main parties by backing an amendment to the Brexit Bill to make remaining inside the European Economic Area (EEA) – and therefore the single market – a negotiating priority.

Chris Leslie, a leading pro-EU MP, told The Independent: “There are now sufficient Tory MPs willing to rebel, so Jeremy Corbyn will need to think again when this issue comes before the Commons.

“It would be unconscionable to have a chance to win - only to fall short because of a hard-Brexit Labour position.”

If Mr Corbyn failed to “come off the fence and do the right thing for jobs”, he would “share responsibility for the decade of austerity to come”, Mr Leslie warned.

Another Labour MP, Chuka Umunna, said: “I hope that the Labour front bench will support UK membership of the single market through the EEA, which is what the overwhelming majority of our members and voters want.”

And a third, Stella Creasy, hailed the Lords result as “fantastic”, urging her party to “pick up the baton to fight for the best future for Britain.

In a sign of Conservative nerves, Lord Ashcroft, the former key party donor, suggested the prime minister might have to pursue the “nuclear option” of threatening to strip the whip from any Tory rebels when the vote comes.

A Labour source told The Independent that “our policy isn’t going to change” – stating it was to leave the single market but negotiate a “new strong relationship” with it.

Mr Corbyn views membership is unacceptable because it would prevent Labour ending “privatisation and outsourcing”, something the EU has denied.

He also wants the freedom to subsidise key industries and angered some Labour MPs by arguing freedom of movement rules allowed “cheap labour” to undercut the wages of UK workers.

However, Mr Corbyn now faces the scenario he was desperate to avoid – having to order Labour MPs to either vote with pro-Brexit Tories, or to sit on their hands.

He would be certain to face a huge revolt – after 83 Labour peers defied him in the Lords – as well as backlash from Labour members and supporters, who strongly oppose a hard Brexit.

Labour rebels in the Lords included former party leader Lord Kinnock, Lord Mandelson and ex-Northern Ireland Secretary Lord Hain.

The Conservative rebels included former Cabinet minister Lord Patten of Barnes and former deputy prime minister Lord Heseltine.

Earlier, peers backed a bid to remove the official exit date, 29 March 2019, from the bill, which will also infuriate Eurosceptics who see the bid as an attempt to thwart Brexit.

Lord Newby, the Liberal Democrat Leader in the Lords, said: “This victory sends a clear message to those sat round the Cabinet table that Parliament won’t just sit back while Theresa May leads us towards a hard Brexit.”